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

[ZachF]

Tesla Closes $200 Billion Gap to Top Boeing By Market Value

Tesla Closes $200 Billion Gap to Top Boeing By Market Value

"Boeing is just the latest manufacturing stalwart and industry bellwether to be elbowed aside by the maker of the Model 3 sedan. The achievement is a particularly satisfying one for Chief Executive Officer Elon Musk, who competes in the rocket-launch sector with another of his companies, Space Exploration Technologies Corp."

Boeing saga is sad... The acolytes of the GE/Welch school of business are destroying yet another storied American industrial company..

SpaceX is worth $36b now.... I wouldn't be surprised for it to pass Boeing in market cap sometime next year...

 

[NicoV]

There is a reasonable chance that at some point in the next month or so Tesla will have to temporarily shut down its Fremont factory due to CV. We are seeing lots of companies doing this and having their workers work from home (which a factory cannot do of course).

With our pooled knowledge and research, I wonder if we would be able to anticipate such a move a few days in advance based on surrounding companies and CV cases in the area. It could be quite lucrative to buy some short-term puts in advance, sell them when the inevitable SP drop overreaction happens, and then use the profits (and any dry powder saved) to scoop up cheap shares before the SP recovers.

Normally I am not a fan of timing the market, but this is a binary action that would definitely drop the SP if it happens.

Why shutdown? They have experience with the Shanghai GF how to deal with Corona successfully.

 

[Motor Mouth]

There is a reasonable chance that at some point in the next month or so Tesla will have to temporarily shut down its Fremont factory due to CV. We are seeing lots of companies doing this and having their workers work from home (which a factory cannot do of course).

With our pooled knowledge and research, I wonder if we would be able to anticipate such a move a few days in advance based on surrounding companies and CV cases in the area. It could be quite lucrative to buy some short-term puts in advance, sell them when the inevitable SP drop overreaction happens, and then use the profits (and any dry powder saved) to scoop up cheap shares before the SP recovers.

Normally I am not a fan of timing the market, but this is a binary action that would definitely drop the SP if it happens.

Or - and just bear with me on this one - if this were to occur...buy stock. I would be concerned with your presumption that factories like TSLA's are going to shut down. If you are certain this will occur, I'd short the market because the non-TSLA ripples would be enormous.

 

[abasile]

$450 Jan2022 puts are getting $98 today. Just sayin'.

Would anyone be terribly upset to add 100 shares at an effective price point of $352?

Sounds good, but puts with closer expirations seem plenty attractive now. The May 15, 2020 puts have pretty large premiums, almost certainly because May 15 comes after the Q1 earnings report. (Does anyone here expect the share price to majorly tank because of Q1? Not me.) The last I checked, the $500 May 15 put was fetching a $48/share premium. That's almost a 10% return in two months! TSLA would have to drop below $452 for that put to be a bad sale. The premium on the $450 May 15 Put is in the low $30s.

The nice thing about a nearer term expiration is that, unless the put gets exercised, you can likely turn around and sell another put at a good premium. I think I'd only sell a 2022 put if I were absolutely convinced that we're at the market bottom and I wanted to lock in the highest possible price for the time value, but then again, with that kind of conviction I'd likely be better off buying straight shares.

It's actually a better deal if you are ambivalent about buying more. If you are definitely going to buy anyway, you might lose your opportunity if the puts aren't exercised.

Yeah, if I were ready to buy more shares at the current price, I wouldn't mess with options, even with puts at the current premiums. Just buy the shares and stay in for the long haul. Selling out of the money puts is a way of supplementing one's exposure to a stock and profiting even if the market trends downward. We have enough TSLA shares today, but we'd be happy to add more if the price drops enough for a put to get exercised.

Not an advice.

 

[Dr. J]

Thing is that he was in Austin recently talking to the legislators. If there was any chance of a deal, he'd be announcing GF5 in Texas already. (Though I suppose he could be waiting until the Q1 results--we can always hope). Remember, some of the legislators are dealership owners, and the dealer association makes a lot of campaign contributions. My unfortunate take is that campaign contributions trump jobs.

Important to note, as you are suggesting, that allowing Tesla direct sales requires an act of the legislature, AFAIK. We went through a detailed analysis of statute and regulations when the state started its EV rebate program and excluded Tesla buyers because we didn't buy at a dealership. The Texas Legislature meets for 6 months, Jan-June every other year (odd years), so it's a difficult issue to resolve with certainty.

It's possible Elon's ill-considered tweet about coronavirus panic being dumb was his frustration with SxSW being canceled--maybe because he had a big announcement to make. Or not. Hey, I'm just reading the tea leaves!

 

[Artful Dodger]

In the name NMC811 "C" refers to cobalt. I.e. it uses cobalt, but less.

Lol, I bow to your superior knowledge of lithium ion chemisty. Or, you could read Dr. Jeff Dahn's latest paper on the subject:

Zhang, N., Zaker, N., Li, H., Liu, A., Inglis, J., Jing, L., ... & Dahn, J. R. (2019). Cobalt-Free Nickel-Rich Positive Electrode Materials with a Core–Shell Structure. Chemistry of Materials, 31(24), 10150-10160.

"Core–shell or concentration-gradient structures have been reported to improve the structural and chemical stability of Ni-rich electrode materials; however, a core–shell or concentration-gradient structure for cobalt-free systems has not yet been studied. In this work Ni(OH)2 core:Ni0.83M0.17(OH)2 shell precursors (M = Mg, Al, and Mn) were prepared in a continuously stirred tank reactor. Homogeneous Ni0.95M0.05(OH)2 precursors having the same average composition as the core–shell precursors were also prepared. Cross-sectional scanning electron microscopy verified the core–shell structure of all the core–shell precursors. During sintering at about 700 °C to make the lithiated oxides, interdiffusion of the M atoms between core and shell occurred with Mg showing a uniform distribution in the particles while Al and Mn still showed a higher concentration at the particle surfaces. The Mn-containing materials …"​

 

[deffu]

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Why shutdown? They have experience with the Shanghai GF how to deal with Corona successfully.

currently its tech companies(mostly software comps) in SV asking employees to work from home. The scenario that I can think of for tesla factory to shut down is its employees at the factory got infected. even this is the case, they may only shut it down partially for a short period of time.

 

[Lessmog]

Sure, but then a 3-pack-a-day, comb-back salesman will come out, thrust his hand into yours and give you conoravirus. Best not to risk it.

Extra points for skillful deflection tyop!

 

[Mike Smith]

CNBC is claiming that Tesla warned of an earnings hit. That's just a flat out lie. They're not even trying to hide their bias anymore.

Coronavirus fallout: At least 150 companies have warned of earnings hit

 

[Rb48888]

$450 Jan2022 puts are getting $98 today. Just sayin'.

Would anyone be terribly upset to add 100 shares at an effective price point of $352?

Thanks for this. I sold a Jan '22 $510 put for $120 today. If exercised, it would activate 1/2 of the dry powder I'd like to deploy before this virus issue is in the rear-view monitor.

The other half is standing by, until we have some greater visibility, and will likely go directly into shares or leaps.

 

[Nocturnal]

Thanks for this. I sold a Jan '22 $510 put for $12 today. If exercised, it would activate 1/2 of the dry powder I'd like to deploy before this virus issue is in the rear-view monitor.

The other half is standing by, until we have some greater visibility, and will likely go directly into shares or leaps.

How could it be exercised before this blows over?

 

[JRP3]

As interesting as it's been to see the first real hardcore algo-downturn, the bottom might be even more interesting. I think buying low is more important to a computer than selling high.

These algos were well out in front of this downturn and 2/3 to 3/4 of it is probably priced in. We need to drop a bit more, and maybe flatten for a period, but I don't see how it could get MUCH worse considering the amount of cash circling around with literally nowhere to land.

You can't do manufacturing from home. If widespread isolation is enacted many industries will be hit. Even self quarantine means people stay home and service industries are impacted. Today the market is around the level of last May, there is room to drop.

 

[mongo]

CNBC is claiming that Tesla warned of an earnings hit. That's just a flat out lie. They're not even trying to hide their bias anymore.

Coronavirus fallout: At least 150 companies have warned of earnings hit

Hit? nah. potential impact? yeah

From Q4 earnings call:

For Q1, please keep in mind that the industry is always impacted by seasonality. Additionally, we are in the process of ramping two major products Model 3 in Shanghai and Model Y in Fremont, which I expect will temporarily weigh on our margins. We are also in the early stages of understanding if and to what extent we may be temporarily impacted by the Coronavirus.

At this point, we're expecting a 1 to 1.5 week delay in the ramp of Shanghai built Model 3 due to a government required factory shutdown. This may slightly impact profitability for the quarter, but is limited as the profit contribution from Model 3 Shanghai remains in the early stages. We are also closely monitoring whether there will be interruptions in the supply chain for cars built in Fremont. So far we're not aware of anything material, but it's important to caveat that this is an evolving story. However, we have more than sufficient cash to continue our expansion plans, while further strengthening the balance sheet.

 

[gerebgraus]

Lol, I bow to your superior knowledge of lithium ion chemisty. Or, you could read Dr. Jeff Dahn's latest paper on the subject:

Zhang, N., Zaker, N., Li, H., Liu, A., Inglis, J., Jing, L., ... & Dahn, J. R. (2019). Cobalt-Free Nickel-Rich Positive Electrode Materials with a Core–Shell Structure. Chemistry of Materials, 31(24), 10150-10160.

"Core–shell or concentration-gradient structures have been reported to improve the structural and chemical stability of Ni-rich electrode materials; however, a core–shell or concentration-gradient structure for cobalt-free systems has not yet been studied. In this work Ni(OH)2 core:Ni0.83M0.17(OH)2 shell precursors (M = Mg, Al, and Mn) were prepared in a continuously stirred tank reactor. Homogeneous Ni0.95M0.05(OH)2 precursors having the same average composition as the core–shell precursors were also prepared. Cross-sectional scanning electron microscopy verified the core–shell structure of all the core–shell precursors. During sintering at about 700 °C to make the lithiated oxides, interdiffusion of the M atoms between core and shell occurred with Mg showing a uniform distribution in the particles while Al and Mn still showed a higher concentration at the particle surfaces. The Mn-containing materials …"​

I appreciate your bowing. It feels really good. Thank you. I have to admit I know nothing about battery chemistry or chemistry or for that matter anything else. But what is the relevance to NMC811 of your quote? Is it supposed to be funny? It does not seem to be relevant to NMC811 as it talks about cobalt-free battery. NMC811 refers to
NMC-811 (Ni ₀ . ₈ Mn ₀ . ₁ Co ₀ . ₁ )

 

[Mike Smith]

Hit? nah. potential impact? yeah

From Q4 earnings call:

In that quote he says the effect on profitability would be limited since it's early production (and those early cars are probably near zero margin anyway). That's not a warning of an earnings hit, it's the opposite.

 

[mongo]

In that quote he says the effect on profitability would be limited since it's early production (and those early cars are probably near zero margin anyway). That's not a warning of an earnings hit, it's the opposite.

For the GF3 part, but they did also mention Fremont could be impacted. Same block quote: "We are also closely monitoring whether there will be interruptions in the supply chain for cars built in Fremont. So far we're not aware of anything material, but it's important to caveat that this is an evolving story."

I agree that calling it a declared hit is overly extrapolating from that.

 

[adiggs]

I don't see how it can avoid getting worse. We are just starting to see effects here in the US.

Regarding a possible sell off, I've begun keeping in mind that the Great Depression (1929 and through the '30's) saw the DJIA drop 90% from peak to trough (took it several months or a year - a quick digestible summary can be found on Wikipedia with lots of numbers like these).

So first observation - are we ready for Dow 2800 from Dow 28,000? Not saying it will happen - but I do believe this is on the table now.

The other thing - worldwide economic activity is estimated to have shrunk 15%, or to run at 85% of pre-Depression levels. For comparison, 08/09 was about a 1% drop in economic activity.


So I'm in the "don't see how it can avoid getting worse". We're still in the early medical reaction - we've got multiple quarters of echos and consequences economically to see arrive in quarterly reports,

 

[jhm]

Extra points for skillful deflection tyop!

Hey, this is not the conoravirus thread!

 

[pz1975]

Or - and just bear with me on this one - if this were to occur...buy stock. I would be concerned with your presumption that factories like TSLA's are going to shut down. If you are certain this will occur, I'd short the market because the non-TSLA ripples would be enormous.

I don’t have a “presumption” this will happen. I said there is a “reasonable chance” - I would state my % estimate but it is really just a guess (and still much less than 50% as of now). My point is that I want to be ready to act if it seems like it will happen.

 

[Mike Smith]

Washington State passes bill to become a ZEV state, pushes for ban of gas cars - Electrek

More ZEV credits coming for Tesla