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

[Causalien]

..... 6 Trillion dollarsssssssssssssssssssssssss.

I have no idea what 6 trillion dollars will do to the economy. 10x 2008.

 

[traxila]

Love the price action today. Love this stock. Own more than ever.

Don’t be deceived by these violent bear market movements. We need to get past the body count for this to really run again. It has just begun.

Please make me a contrarian indicator. I always have been in the past. I am OK with that continuing.

 

[lascavarian]

..... 6 Trillion dollarsssssssssssssssssssssssss.

I have no idea what 6 trillion dollars will do to the economy. 10x 2008.

I am figuring about half to the Asian markets and the rest lands in the US markets. Stocks can’t help but go up.

 

[StealthP3D]

750? That was a fair price a month ago (we had the capital raise at that price). But the world has changed a lot since then. After buying back half my shares at 358 I was looking for a good place to add more, but this is not that level.

We're at 528 in after market now, will we be at 600 at the end of the week? That would imply hardly anything has changed. But we are just starting to feel the pain.

I'm not going to argue TSLA won't go down in the short-term (I think it likely will due to nothing more than volatility and fear). However, the idea that a $600 price at the end of the week would imply that Coronavirus has changed nothing is faulty reasoning. Here's why:

First, the valuation of a company growing as fast as Tesla and with an addressable market as large as Tesla is a very subjective thing. There is no "correct" valuation except as the market prices it at any moment.

Second, the "new" valuation of TSLA as the market was applying it the second half of last year and into January of this year was not a process that was mature or established when Coronavirus started rearing its head in China beginning in December but really becoming known in the investment community in January. This cannot be over-emphasized because the new, higher, valuations being applied to TSLA in Q4 2019 and Q1 2020 were due in part to Shanghai G3 ramping production. On Feb. 19, 2020 TSLA closed at $917. This was almost three weeks after it was announced that a factory shutdown due to Coronavirus would delay G3 ramp-up of the Model 3. It was 5 weeks after it was widely known that Coronavirus was spreading throughout China and into other countries. Yet it was still valued at $917, presumably with the impact of the factory shutdown priced in.

Within 6 trading days of TSLA hitting it's all-time closing high of $917, TSLA was trading in the $600's. That fall was precipitated by the spread of Coronavirus. We cannot, in hindsight, predict where Tesla would have been trading had Coronavirus not entered the picture. My best guess is at least $1100 - $1300 by the end of February or early March. After that it becomes increasingly difficult to come up with meaningful guesses because the valuation would depend upon the speed of the ramp, profit margins, etc., all things that are unknowable now in a world disrupted by Coronavirus.

For those reasons I find it ridiculous to claim that a $600 valuation at the end of this week implies Coronavirus has not changed anything. Obviously, it has. How much, we can only guess. My analysis says a $600 valuation by the end of the week would imply Coronavirus has halved the value of TSLA (based on my guess that the near term valuation was headed for $1100-$1300 until Coronavirus happened). But that analysis ignores that Tesla becomes more valuable as G4 progresses and the ramp at G3 grows and matures.

That said, this is not an argument that TSLA can only go up from here because there is still a lot of fear and volatility in the market. What I am confident of is that Tesla would be a lot higher than $600/share had Coronavirus not happened. So even a $600 valuation has shareholders "taking it on the chin" from where we would be if Coronavirus didn't exist.

 

[Webeevdrivers]

I am figuring about half to the Asian markets and the rest lands in the US markets. Stocks can’t help but go up.

I wish I understood this kind of thing better. Where does this money come from?. Is it borrowed? Does it have to be paid back? 6 trillion is such a huge number. Many of us in Canada are freaking because we are running up a 100 billion dollar deficit to try and remedy this. 6 trillion? Wow. Big number. I know. 10 times as many people as well. Still. We are not American citizens but we live there part of the year, own property, pay taxes, contribute and volunteer in our community. Two completely different societies, but we enjoy both. Should be interesting how it affects those of us in our situation.

 

[kengchang]

I wish I understood this kind of thing better. Where does this money come from?. Is it borrowed? Does it have to be paid back? 6 trillion is such a huge number. Many of us in Canada are freaking because we are running up a 100 billion dollar deficit to try and remedy this. 6 trillion? Wow. Big number. I know. 10 times as many people as well. Still.

Just sayin.

US GDP is 12x of Canada. The money is borrowed by printing more money but it has to be done before the labor market collapse.

 

[Thekiwi]

Unsure where the $6 Trillion comes from, presumably the Fed just prints most of it and they are hoping the US dollar status as the worlds reserve currency remains and the value of the dollar doesn't collapse - although a fall in the value of the dollar would maybe be good for the recovery to come.

I guess its only $60 Billion a year in interest payments at 1% - so wouldn't be too detrimental. Current US government debt is already at $23 Trillion before this.

 

[wipster]

You lost me at "Trump specifically said".

I guess it's a good thing Karen isn't still posting here... she'd go apoplectic.

 

[Webeevdrivers]

US GDP is 12x of Canada. The money is borrowed by printing more money but it has to be done before the labor market collapse.
View attachment 525402

Thank you for trying to explain it. But I don’t understand the printing money part. It sounds so easy. Why doesn’t everyone do it. I know this is the wrong forum for this and I don’t expect an explanation. Just something I’ll have to look up and try and figure out. But thank you for trying. My wife and I are retired soldiers and just finishing up a second career in the RV industry. This kind of thing was never a need to know kind of thing.

 

[StealthP3D]

The bottom is likely between $300 to $350.

I can almost agree with you there. If you add a dollar to that $350, I'll agree. Because it's YTD low is $350.51 (which rounds up to $351).

 

[PhaseWhite]

..... 6 Trillion dollarsssssssssssssssssssssssss.

I have no idea what 6 trillion dollars will do to the economy. 10x 2008.

That’s an insane amount of debt, which no doubt the Federal Reserve will end up “buying”

Besides hedging TSLA with inverse ETFs I’ve been buying BTC at these levels as an inflation hedge for my cash.

Not advice

 

[Causalien]

I wish I understood this kind of thing better. Where does this money come from?. Is it borrowed? Does it have to be paid back? 6 trillion is such a huge number. Many of us in Canada are freaking because we are running up a 100 billion dollar deficit to try and remedy this. 6 trillion? Wow. Big number. I know. 10 times as many people as well. Still. We are not American citizens but we live there part of the year, own property, pay taxes, contribute and volunteer in our community. Two completely different societies, but we enjoy both. Should be interesting how it affects those of us in our situation.

It comes from your future. Specifically, everyone's future because USD is currently a reserve currency.

 

[Causalien]

That’s an insane amount of debt, which no doubt the Federal Reserve will end up “buying”

Besides hedging TSLA with inverse ETFs I’ve been buying BTC at these levels as an inflation hedge for my cash.

Not advice

I tend to keep the more esoteric investment options and greay market assets off this forum. Because hey! we are on the internet and everything you say is saved forever for uncle sam.

 

[Cirrus MS100D]

Thank you for trying to explain it. But I don’t understand the printing money part. It sounds so easy. Why doesn’t everyone do it. I know this is the wrong forum for this and I don’t expect an explanation. Just something I’ll have to look up and try and figure out. But thank you for trying. My wife and I are retired soldiers and just finishing up a second career in the RV industry. This kind of thing was never a need to know kind of thing.

OT reply to your question, but you’re basically getting into a little bit of “modern monetary theory” - Check our this great little segment from NPR’s Planet Money. Lots of great little “explainers” on macro and micro topics like this.

#866: Modern Monetary Theory

 

[MC3OZ]

I'm not going to argue TSLA won't go down in the short-term (I think it likely will due to nothing more than volatility and fear). However, the idea that a $600 price at the end of the week would imply that Coronavirus has changed nothing is faulty reasoning. Here's why:

First, the valuation of a company growing as fast as Tesla and with an addressable market as large as Tesla is a very subjective thing. There is no "correct" valuation except as the market prices it at any moment.

Second, the "new" valuation of TSLA as the market was applying it the second half of last year and into January of this year was not a process that was mature or established when Coronavirus started rearing its head in China beginning in December but really becoming known in the investment community in January. This cannot be over-emphasized because the new, higher, valuations being applied to TSLA in Q4 2019 and Q1 2020 were due in part to Shanghai G3 ramping production. On Feb. 19, 2020 TSLA closed at $917. This was almost three weeks after it was announced that a factory shutdown due to Coronavirus would delay G3 ramp-up of the Model 3. It was 5 weeks after it was widely known that Coronavirus was spreading throughout China and into other countries. Yet it was still valued at $917, presumably with the impact of the factory shutdown priced in.

Within 6 trading days of TSLA hitting it's all-time closing high of $917, TSLA was trading in the $600's. That fall was precipitated by the spread of Coronavirus. We cannot, in hindsight, predict where Tesla would have been trading had Coronavirus not entered the picture. My best guess is at least $1100 - $1300 by the end of February or early March. After that it becomes increasingly difficult to come up with meaningful guesses because the valuation would depend upon the speed of the ramp, profit margins, etc., all things that are unknowable now in a world disrupted by Coronavirus.

For those reasons I find it ridiculous to claim that a $600 valuation at the end of this week implies Coronavirus has not changed anything. Obviously, it has. How much, we can only guess. My analysis says a $600 valuation by the end of the week would imply Coronavirus has halved the value of TSLA (based on my guess that the near term valuation was headed for $1100-$1300 until Coronavirus happened). But that analysis ignores that Tesla becomes more valuable as G4 progresses and the ramp at G3 grows and matures.

That said, this is not an argument that TSLA can only go up from here because there is still a lot of fear and volatility in the market. What I am confident of is that Tesla would be a lot higher than $600/share had Coronavirus not happened. So even a $600 valuation has shareholders "taking it on the chin" from where we would be if Coronavirus didn't exist.

There are other questions that are relevant here...

What can Tesla become?

What new market segments will they enter, and what market share in EVs,and Energy will they eventually achieve?

My guess is there is a lot of untapped potential here in the long term, markets at present are more focused on the immediate crisis than the question of long term potential....

It is likely those trying to time the market still have time on their side, and may buy back in at a better price, because it will be weeks or months before the wider market focuses at all on long term potential .. but IMO this is a Sleeping Dragon...

 

[MC3OZ]

OT reply to your question, but you’re basically getting into a little bit of “modern monetary theory” - Check our this great little segment from NPR’s Planet Money. Lots of great little “explainers” on macro and micro topics like this.

#866: Modern Monetary Theory

If we want to take a really interesting diversion, inflation is based around a scarcity of resources.

Land is still finite and scarce, but with increasing automation labour is no longer scare...
if we move to an economy based on Renewable Energy, then energy is abundant and cheap, the cost of embedded energy in every manufactured product decreases. Quality food may be scarce but again we are getting better at producing it.

Genuinely scarce resources like prime real estate and quality art are already so highly priced that only a very small percentage of the population is in the market.

While ever interest rates are low money is also abundant and interest rates are not driving inflation.

It isn't hard to see why inflation isn't happening, it will not come without wages growth.

If lots of things are getting cheaper, why are household budgets so tight?

Mortgages and rents are high due to scarcity of real estate, the cost of products households buy has often dropped, but households buy a greater range of stuff. I do expect insurance premiums to rise.

But the big reason is for the bottom 80% wages are not increasing.

This is a time were we can only guess, I don't think the experts know what to expect, this is simply a period of rapid change and lots of uncertainty.

 

[StarFoxisDown!]

There are other questions that are relevant here...

What can Tesla become?

What new market segments will they enter, and what market share in EVs,and Energy will they eventually achieve?

My guess is there is a lot of untapped potential here in the long term, markets at present are more focused on the immediate crisis than the question of long term potential....

It is likely those trying to time the market still have time on their side, and may buy back in at a better price, because it will be weeks or months before the wider market focuses at all on long term potential .. but IMO this is a Sleeping Dragon...

Actually to somewhat touch on what you're saying. I could also see Tesla holding up in the 500-600 range, possibly getting back into 700 during the next month even if macro's stay at their current levels or go down another 10-15% simply because a large amount of smart money knows that during times like these, it accelerates transitions. Combine that with the fact that Giga 3 is expanding production right now and Tesla could and likely will hit the exit these difficult times with a lead out of the gate on everyone one else that transitions their marketshare even faster.

Case in point was Amazon during the financial crisis in late 2008 and into 2009. It wasn't hit nearly as hard as other stocks/industries because smart money understood that it was a transformative company. Amazon then proceeded to outperform the markets throughout 2009

That's why I think there's a equal chance of the stock retracing back towards the low it set last week of 351 or moving higher from here with some minor bumps along the way.

 

[adiggs]

Thank you for trying to explain it. But I don’t understand the printing money part. It sounds so easy. Why doesn’t everyone do it. I know this is the wrong forum for this and I don’t expect an explanation. Just something I’ll have to look up and try and figure out. But thank you for trying. My wife and I are retired soldiers and just finishing up a second career in the RV industry. This kind of thing was never a need to know kind of thing.

It can be heavy wading, but I commend Modern Monetary Theory to you to try and get your arms around why it might work.

Two key ideas:
- for a sovereign currency issuer, they don't have a constraint of defaulting on debts issued in their currency (they can always issue more to pay the debts). Instead, they have an inflation constraint. And so far, inflation is saying we can take on more.
- It is a false equivalence to think of the US government as somehow equivalent but for scale, of a household or even a state government. The difference is as above - the US government can issue currency for the debts denominated in that currency - we as households do not have the ability to print money in the currency our debts are due in. (It's important our budgets are balanced or in surplus - there's an argument to be made that the US government needs to run a deficit).

Here's a starting point.
Modern Monetary Theory (MMT)

This is a topic I find fascinating, and have my own thoughts on. Good stuff for a different thread sometime if you're interested

 

[Artful Dodger]

Senate, White House reach $2 trillion stimulus deal to blunt coronavirus fallout |
The Washington Post | Wed, Mar 24, 01:07 am EDT

"Senate leaders and the Trump administration reached agreement early Wednesday on a $2 trillion stimulus package to rescue the economy from the coronavirus assault, potentially setting the stage for swift passage of the massive legislation through both chambers of Congress.

“Ladies and gentlemen, we are done. We have a deal,” White House legislative affairs director Eric Ueland told reporters around 1 a.m.
​

 

[Eugene Ash]

Well 99.5% of my portfolio is in $tsla $350 June 17,2022 calls but for the last few days I’ve added to $1800 and $1300 June 17, 2022 calls since I pretty much ran out of cash

So, this played out well with the deep ITM 350 calls. Since I am a noob in options, could you please opine?
I bought 1 call, and I find 350 to be a desirable price. Expiration is far away $350 June 17,2022. My break-even on this is 504, which was exceeded today. I am still accumulating shares, so I'd like to have that 100 shares, however other expenditures are planned between now and June 2022. Can I just hold the call till then and just plan to have 35k by then in my [taxable] account?