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

[Artful Dodger]

After-action Report: Tue, Mar 31, 2020: (Full-Day's Trading)

VWAP: $525.73
Volume: 17,779,646
Traded: $9,347,341,133.36 ($9.38 B)

Closing SP / VWAP: 99.65%
(TSLA closed BELOW today's Avg SP)​

FINRA Short/Total Volume = 56.88% (44nd Percentile rank Short selling)
FINRA Vol / NASDAQ Vol = 46.31% of trading was reported by FINRA (54nd Percentile)

Comment: "Pre-Market headfake; Early gains, Slow fade"

 

[Ameliorate]

That number was the original prediction without any post Covid revision.

Oh is that it? @Papafox was concerned we wouldn't hit the factset numbers so I looked around and all I could find was 97k https://www.thestreet.com/investing...to-be-hurt-by-coronavirus-morgan-stanley-says
However as of today maybe that number was revised to 92k (just found this) https://www.thestreet.com/lifestyle/cars/tesla-reports-new-delivery-figures-soon-heres-what-to-watch
Which I still find quite high (for the street, this seems roughly doable or in that ballpark)

 

[anthonyj]

The answer is for every 'Tesla' that successfully crosses the Wall St. "Valley of Death", there are a hundred or more that die trying. Why do you think Tesla is the lone mover in sustainable transport? The others are actively undermined by Wall St. short sellers. Why does China (with no state-sponsored short selling) have a growing EV industry?

Tesla is the lone mover because they are the only company to produce a compelling product that has wide appeal. You don’t have to be a tree hugger environmentalist to love Tesla’s EV and solar. Tesla is the only company to produce green product that makes economic sense. They have such a huge lead on the new energy industry, anyone in Tesla’s way gets run over. No one can compete. They will be a monopoly in 15 years. Companies that can’t cross the “valley of death” are just bad businesses or are too late to the party. I care about only Tesla in this thread

 

[JRP3]

Isn't it irrelevant? "People don't want electric cars, they want Tesla's." We should welcome more BEV's, not less, I have zero concerns over "tesla killers".

It does further reduce the "competition is coming" narrative the bears keep pushing.

 

[PlaidCPA]

"I remember once reading a study Fidelity did that found the individuals that had the best underlying performance with them over time....were the individuals that had forgot they even had an account with Fidelity.
Right now, after having done what I needed to do to raise some cash, I'm just sitting tight and forgetting I have an account, and upping my drinks to 3 per night." - SA commentator

The quote above is my strategy to weather this storm.

 

[adiggs]

Again, you've asked a question, then ignored the answer. You asked 'what does it matter in the long run?'

The answer is for every 'Tesla' that successfully crosses the Wall St. "Valley of Death", there are a hundred or more that die trying. Why do you think Tesla is the lone mover in sustainable transport? The others are actively undermined by Wall St. short sellers. Why does China (with no state-sponsored short selling) have a growing EV industry?

Educating the uninformed is not 'hair pulling'. Conversely, sticking your head in the sand is asking to have your tail feathers *fluffed*.

BTW, the next time you use the phrase 'insane conspiracy theory', try to do so in a less obviously disengenous arguement. Look at what Market Makers are doing in S. Korea since short selling was banned on Mar 13. Due to their version of the MMs exemption, the volume of short selling has not decreased at all in S. Korean markets:

Short Selling Not Decreasing Despite Ban

That's actual data which shows who is conducting short selling: its the Market Makers. Through comparison, that shows the insanity of SEC rules, or rather belief that they have any effect whatsoever beyond providing legal cover and PR talking points.

Something I've been thinking about - my understanding of the market making function is that it's important to stay delta neutral to the market. Market makers make their money on volume, not by trading for their account or taking an overall position on the direction something will trade.

Separately, there are a number of different legal entities that trade for their account - that definitely do take a position on the direction something will trade. Investment banks, hedge funds, mutual funds, etc..


Is it even feasible to allow short selling for market makers only, and disallow market makers to have a position on the direction? Or is that just too difficult to enforce?

My thinking here is that the problem is a combination problem - the ability of market makers to naked short for short periods as part of their larger function of creating and providing market liquidity, wrapped up in the same company that has a financial interest in what direction a financial instrument trades. Therefore - get those separated legally (the primary consequence of a market maker taking a directional position being that they lose their market maker position). If market makers are indifferent to the direction, and the people that care about direction can't use market maker powers in the market place, would that (at least theoretically) cure the problem?

 

[Artful Dodger]

I'm still thinking 90,000 is possible, but I think anything from 65,000 to 90,000 are reasonable.

Don't forget that on March 9th Elon announced that Tesla had produced their 1 millionth car. This implies 'to-date' production of about 79K cars, but that was 14 days before the Fremont shutdown, so production should still be close to 100K for Q1.

Deliveries is a tougher situation to estimate, with both Europe and N. America having their EOQ deliveries rush blunted. Even so, every inventory car remaining after Q1 will be delivered relatively quickly in Q2.

Luckily, there's signifcant software revenue likely to be reported in Q2 to help smooth the bump. And although total revenue will likely be down, profitability may still be acheived as COGS decreases in kind, but (high-margin) software provides a higher proportion of revenue.

Cheers!

 

[Tim S]

Don't forget that on March 9th Elon announced that Tesla had produced their 1 millionth car. This implies 'to-date' production of about 79K cars, but that was 14 days before the Fremont shutdown, so production should still be close to 100K for Q1.

Deliveries is a tougher situation to estimate, with both Europe and N. America having their EOQ deliveries rush blunted. Even so, every inventory car remaining after Q1 will be delivered relatively quickly in Q2.

Luckily, there's signifcant software revenue likely to be reported in Q2 to help smooth the bump. And although total revenue will likely be down, profitability may still be acheived as COGS decreases in kind, but (high-margin) software provides a higher proportion of revenue.

Cheers!

Significant software revenue in Q2 or Q1?

 

[vikings123]

That number was the original prediction without any post Covid revision.

The estimate previously was for 103,400 deliveries.

Anything over 85K will be a surprise but not seeing a whole lot of upside to SP without guidance. OTOH If we deliver in the low 70s range I can see us going down to the low 400s or even test recent lows.

 

[woodisgood]

Not sure if already mentioned or linked, but Gali is predicting 65K deliveries for Q1.

That seems awfully low (though not as low as my 30K forecast!), but who knows.

 

[Prunesquallor]

Cathy Wood on macros. V-shaped recovery likely.

Takeaways:

• Inflation unlikely
• Approves of House bill deferred payroll taxes (employer and employee) into next year (I was not aware this was in the bill)
• Corporate aid in bill is loans, not giveaways - must be paid back before dividends can be issued or stock bought back (not sure if this is how the final bill reads)
• V-shaped recovery likely, but probably have not bottomed out yet (similar to 1987)
• Reallocation from bonds to equity (stocks)
• Innovators will be the winners, because they are problem solvers

 

[powertoold]

Not sure if already mentioned or linked, but Gali is predicting 65K deliveries for Q1.

That seems awfully low (though not as low as my 30K forecast!), but who knows.

Gali seems easily influenced by hype but also FUD. I remember he fell for the demand cliff thesis in Q1 2019.

 

[vikings123]

Not sure if already mentioned or linked, but Gali is predicting 65K deliveries for Q1.

That seems awfully low (though not as low as my 30K forecast!), but who knows.

Yeah I watched that video, he pretty much assumes all worst scenarios. Even if his nightmares come true I just don’t see the 65K number.

 

[Webeevdrivers]

So obviously there is still some inventory out there. Here we are in a new quarter (almost). Do you think Tesla will start to offer any goodies on some of the stragglers or would they just sit on them and let “nature take its course”. I’m thinking things like maybe unlimited supercharging, maybe upgrade rims and tires etc. I’m not sure it would benefit them. But is there some reason they would want these gone quicker? Can’t really see cash flow being a reason but I’m not in the know on the accounting side of a company like Tesla.

 

[Artful Dodger]

Significant software revenue in Q2 or Q1?

Q2. FSD "stop at sign/lights" general release seems quite likely, and forms approx. half of the FSD funds held in reserve, which could then be claimed as GAAP revenue in 2020Q2.

There is another chance that we'll see the final tranche of FSD revenue released for 'Navigate on City Streets', although there is no anecdotal evidence yet of this being in the hands of beta testers (early access program). But Q2 is 13 weeks, so there is still some potential...

Overall, I think it's likely about $250M in FSD revenue will be released in Q2. If Tesla can control costs well during the shutdown, there's still potential for that magical "One Dollar" profit for 2020Q2. Then if the sum of 2019Q3+Q4 +2020Q1 net profit is more than $1, TSLA qualifies for S&P 500 inclusion in July, just as the USA starts to come off sick-leave.

Could be a formula for a substantial runup in TSLA. I'll be watching with dry powder.

Cheers!

 

[S3XY]

Was just looking into this. I dislike it. I doubt it will effect Tesla much but the OEM's will be allowed to cling to dear life for a bit longer.....
https://nepis.epa.gov/Exe/ZyPDF.cgi?Dockey=P100V26H.pdf

A few excerpts and I bolded some below:

"Manufacturer Impacts
Reduced regulatory costs and burdens.
Increased new vehicle sales.
•$252.6 billion reduction in regulatory costs through MY 2029.
•1 million additional new vehicle sales through MY 2029.
•Reduction from 56% to 3% in the percentage of hybrid vehicles needed to comply in MY 2030.
•37.0 mpg projected overall industry average required fuel economy in MYs 2021-2026, compared to 46.7 mpg projected requirement in MY 2025 under standards issued in 2012


2- 3% increase in daily fuel consumption
About 0.5 million barrels per day increase in fuel consumption

rest of info here - The Safer Affordable Fuel Efficient (SAFE) Vehicles Proposed Rule for Model Years 2021-2026 | US EPA

Leading the lambs to slaughter.

 

[phantasms]

So obviously there is still some inventory out there. Here we are in a new quarter (almost). Do you think Tesla will start to offer any goodies on some of the stragglers or would they just sit on them and let “nature take its course”. I’m thinking things like maybe unlimited supercharging, maybe upgrade rims and tires etc. I’m not sure it would benefit them. But is there some reason they would want these gone quicker? Can’t really see cash flow being a reason but I’m not in the know on the accounting side of a company like Tesla.

I wonder this as well. I’m hoping so as my JCW Mini lease is up in 53 days. Looking to grab a M3P or Y.

Software side I’d LOVE to give them money.

I’d happily pay to have my boosted AWD turned into a full performance with track mode. [let’s not discuss if that’s possible or not in this thread].

Also, as I don’t have autopilot it would cost me $10K to get FSD. Dumping that into stock instead is a no brainer. I’d be interested if there was any real discount, though, for obvious reasons I’m not sure that will happen again.

Lastly, if they offer a Ludicrous mode upgrade on the M3P I’d pick one up. My only hesitation on picking up a M3P is that it’ll require different hardware to achieve Ludicrous. Offer that upgrade to the current owners and I’m all in.

In Elon I trust.

 

[vikings123]

So obviously there is still some inventory out there. Here we are in a new quarter (almost). Do you think Tesla will start to offer any goodies on some of the stragglers or would they just sit on them and let “nature take its course”. I’m thinking things like maybe unlimited supercharging, maybe upgrade rims and tires etc. I’m not sure it would benefit them. But is there some reason they would want these gone quicker? Can’t really see cash flow being a reason but I’m not in the know on the accounting side of a company like Tesla.

I doubt you will see any incentives in Q2 especially with the uncertainty around the restart of Fremont production. Now is the time keep some inventory as we are production constrained.

The fact that they did not offer any incentives for Q1 is bullish for P&D report coming out this week. I don’t mean 100K but somewhere around the 85K number.

 

[Bet TSLA]

Gali seems easily influenced by hype but also FUD.

Pretty typical of those whose understanding is superficial.

 

[powertoold]

Pretty typical of those whose understanding is superficial.

I don't think Gali has superficial understanding. He's a YouTube personality, so he tends to dramatize things for our entertainment