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

[CorneliusXX]

Absolutely agree, but I expected him to have a much more cerebral reaction than this. He sounds like a spoiled brat who's throwing his toys out of the pram because he can't get what he wants from gov. and state officials as easily as he used to.

It depends, if you want to force change you need to start from a position further to the extreme of what you want to achieve and negotiate towards the middle.

 

[Singuy]

FSD Day was after bad Q1 results, the market mostly didn't understand or believe it.

Tesla has more credibility going into battery day... after good Q1 results.

My original thought was that a new battery was going into Plaid Model S, and they would show a Model S with the battery and a timeline for production.

My reservation now is they are delaying capex for the semi, Plaid Model S would easy to delay... but I think it should be lower capex or more strategic, so I hope it proceeds on schedule.

Show too much and it will Osbourne sales if delayed. I really like how Tesla did the last hardware update in which he said those improvements were already in the car but just needs a software update.

 

[CorneliusXX]

If a fun guy tries to get into your house... Tesla's HVAC will stop him!

I presume @Krugerrand has already purchased a dozen

 

[mongo]

”many suppliers especially small ones are having a hard time”

Maybe some of these will risk bankrupcy. I think Tesla should/will consider a capital raise and going on a shopping spree for key suppliers at a discount price. As Tesla is going for 20M vehicles per year at the end of this decade they are gonna need a bigger share of these companies’ business.

Also I assume a lot of states will be looking at some pretty bad unemployment rates and having Sparks’s labor shortage problem will start to look very attractive. Expect very favorable deals over the coming months.

Now is the time for Tesla to raise capital, acquire suppliers, sign deals for Gigafactories.

On the other hand, 'the best part is no part'. These suppliers likely have multiple clients, and Tesla would not want to be in a Tier 1-n position. Example: Grohmann dropped all their other contracts when Tesla purchased them.
Tesla also knows how to handle supply chain disruptions (not that they want to). Elon knows what it means to be a struggling startup.

Do options premiums go to zero in the last minutes before close on the day they expire? I sold some covered calls and am debating buying the calls back tomorrow vs letting them execute and buying more shares today. I have never held options to expirery nor had covered calls execute.

Yes, in the money call will have time value untill the end. You can't control when/ if they are executed; however, you can buy them back.

Also consider if there are any tax implications.

Edit: typo

 

[Artful Dodger]

There is an important error in the earnings call transcripts from both Seeking Alpha and Motley Fool.

Yeah, they don't create the transcript though. The text comes via Youtube's Closed Caption (CC) feature, which is automatically generated via voice recognition software

The advantage to reading the transcript on the Youtube video page is that they provide a direct link to the time index corresponding to the text. This makes it easy to 'human truth' the transcript (it can be pretty mangled).

To access transcripts on Youtube (for videos that offer the CC feature), click on the 3 dots "..." and then after the flyout appears, click "Open transcript". Here's a screenie:



Cheers!

 

[Mike Smith]

Five upgrades:

Tesla price target raised to $925 from $864 at Goldman Sachs

Tesla price target raised to $700 from $580 at Credit Suisse

Tesla price target raised to $1,020 from $840 at JMP Securities

Tesla price target raised to $615 from $380 at RBC Capital

Tesla price target raised to $600 from $425 at Wedbush

edit: added fifth upgrade

 

[Mike Smith]

'Goldman Sachs analyst Mark Delaney raised the firm's price target on Tesla to $925 from $864 and keeps a Buy rating on the shares. The company's margin upside in Q1 illustrates its "good earnings potential," Delaney tells investors in a post-earnings research note. The report shows that Tesla is on pace to generate strong margins in the intermediate to longer-term, and in turn drive "material" earnings growth, contends the analyst. Delaney expects "weak" Q2 results given the continued shutdown of Tesla's Fremont factory related to COVID-19 restrictions in the region, but he sees good intermediate to longer-term revenue growth as electric vehicle adoption increases and due to the company's product leadership.'

'JMP Securities analyst Joseph Osha raised the price target on Tesla (NASDAQ: TSLA) to $1,020.00 (from $840.00) while raising 2021 estimates slightly. The bulk of the move in price target is a shift in multiples to pre-COVID levels.
The analyst reiterated a Market Outperform rating, stating "As dim as the near-term picture is, TSLA’s long-term prospects are as bright as they have ever been. The company has the balance sheet to continue expanding, and as we expected, Mr. Musk reiterated his commitment to expansion on yesterday’s call". He went on to state "we are shifting to a 32x EV/EBITDA target from 25x, and a 5.5x EV/revenue target from 4x. The result supports a price target of $1,020, up from our previous $840 target".

'Credit Suisse analyst Dan Levy raised the firm's price target on Tesla to $700 from $580 following the company's "gross margin fueled beat" in Q1, which he believes should continue near-term momentum in the stock. In addition to "providing us with an interesting call," Elon Musk expressed confidence in 40% compound annual growth over the next 5-10 years and said capacity expansion plans are intact, leaving the central long-term narrative intact, Levy tells investors. Levy keeps a Neutral rating on Tesla shares as he expects some impact to the stock when it really gets confronted with coronavirus weakness via volume softness or greater cash burn.'

 

[FrankSG]

The 10-Q is out!

0001564590-20-019931 | 10-Q | Tesla, Inc.

That was fast.

 

[FrankSG]

From the 10-Q:

Automotive Regulatory Credits

Deferred revenue related to sales of automotive regulatory credits was $ 140 million as of March 31, 2020 and December 31, 2019. No revenue was recognized from the deferred revenue balance as of December 31, 2019. We expect to recognize the deferred revenue as of March 31, 2020 in the next 12 months.

Correct me if I'm interpreting this wrong, but this sounds like all $354M in credits from this quarter came from this quarter, rather than from the deferred credits balance. So that must mean this is the FCA Deal in action as of Q1'20, and this level of credits is sustainable going forward, and will perhaps even increase if Tesla sells more EVs in EU and/or if the % of Fiat's sales that are EVs drops.

 

[Mike Smith]

From the 10-Q:



Correct me if I'm interpreting this wrong, but this sounds like all $354M in credits from this quarter came from this quarter, rather than from the deferred credits balance. So that must mean this is the FCA Deal in action as of Q1'20, and this level of credits is sustainable going forward, and will perhaps even increase if Tesla sells more EVs in EU and/or Fiat sells less.

That's how I read it.

 

[myt-e-s-l-a]

Five upgrades:

Tesla price target raised to $925 from $864 at Goldman Sachs

Tesla price target raised to $700 from $580 at Credit Suisse

Tesla price target raised to $1,020 from $840 at JMP Securities

Tesla price target raised to $615 from $380 at RBC Capital

Tesla price target raised to $600 from $425 at Wedbush

edit: added fifth upgrade

Good. I was waiting for this event.

The implication is that my short puts options/spread will likely expire worthless and my long call hedge will be ITM. A win-win Risk reversal strategy for ER.

200501 785 put
200501 760 put
200501 700/600 put spread

200501 800 call

 

[saniflash]

Do options premiums go to zero in the last minutes before close on the day they expire? I sold some covered calls and am debating buying the calls back tomorrow vs letting them execute and buying more shares today. I have never held options to expirery nor had covered calls execute.

as options near their expiration date their time value dissipates (the loss in time value is accelerating i.e. its second derivative is positive). in the moment of expiration, the option's price will be equal to its intrinsic value, i.e.

ITM = stockprice - strike
OTM = $0

while options that are ITM are usually exercised by their holders, there's actually a lottery going on in the background who gets assigned. so there's no 100% guarantee that you'll be assigned even if the option finished ITM. Obivously the more ITM the higher the likelihood. If an option is just slightly ITM you might not get assigned as the option holder might weigh the risk of holding the stock + tx fees higher than the remaining option value. takeaway is I do not rely 100% on my shares being called away.

Since DITM options carry only little time value, BUY to CLOSE an option ahead of its expiration can make more sense for these options as you won't forego a lot of premium.

 

[Right_Said_Fred]

From the 10-Q:



Correct me if I'm interpreting this wrong, but this sounds like all $354M in credits from this quarter came from this quarter, rather than from the deferred credits balance. So that must mean this is the FCA Deal in action as of Q1'20, and this level of credits is sustainable going forward, and will perhaps even increase if Tesla sells more EVs in EU and/or Fiat sells less.

I'm not sure if the credits will increase if FCA sells less. That would be true if FCA sells less EVs, but they were hardly selling any up to now. If they sell less ICEs, which will certainly be the case in Q2, they will have less need for compensation through Tesla's EVs. Or is there a flaw in my reasoning?

 

[LN1_Casey]

The 10-Q is out!

0001564590-20-019931 | 10-Q | Tesla, Inc.

That was fast.

Wonder if they're trying to squish some shorts. A quick release after positive results likely means their arguments lack weight, and then they don't have time to cover in between.

 

[RobStark]

EV Sales: Global Top 20 March 2020

 

[FrankSG]

I'm not sure if the credits will increase if FCA sells less. That would be true if FCA sells less EVs, but they were hardly selling any up to now. If they sell less ICEs, which will certainly be the case in Q2, they will have less need for compensation through Tesla's EVs. Or is there a flaw in my reasoning?

No, that's perfect. That's what I meant as well, but maybe the wording wasn't 100% clear. Edited the post to reflect this better. Thanks!

 

[Mike Smith]

'We currently expect our average annual capital expenditures in 2020 and the two succeeding fiscal years to be $2.5 billion to $3.5 billion.'

 

[EinSV]

Five upgrades:

Tesla price target raised to $925 from $864 at Goldman Sachs

Tesla price target raised to $700 from $580 at Credit Suisse

Tesla price target raised to $1,020 from $840 at JMP Securities

Tesla price target raised to $615 from $380 at RBC Capital

Tesla price target raised to $600 from $425 at Wedbush

edit: added fifth upgrade

Also raised to $1100 at New Street Research (Pierre Ferragu)

Twitter

 

[Prunesquallor]

Agreed. Tesla should consider the following strategic reorganization of manufacturing assets:

• instantiate "Alien Dreadnaught v1.0" by building new automated lines for Model 3/Y at GF1/Sparks which will not increase labor needs beyond what the local area can sustain
  
• once new lines are working at Sparks, move old robots/tooling to new Model Y plant (co-located with Cybertruck and built as a 'phase 2')
• leave S/X production in Fremont until such time as new batteries are available and a new model body is introduced. New paint shop can be used for S/X/Roadster
  
• leave Engineering/Software/White collar jobs in San Franciso Bay area where employees can work from home routinely and w/o interruption in future outbreaks.

As Mike Tyson said, "Everyone has a plan until they get punched in the face".

Time for a new plan.

Texas No.1 destination for companies leaving California for last 12 years
Texas No.1 destination for companies leaving California for last 12 years

"California companies leave because the state's business climate continues to worsen, particularly with the harsh employment, immigration and spending measures that Gov. Gavin Newsom has approved," said Joseph Vranich, the author of the study. "I foresee more exits because California politicians have a level of contempt for business that has reached epic lows."

Not that I'm holding up Toyota as a company to emulate, but you get the parallels:

"The Dallas-Fort Worth region has the third highest number of Fortune 500 headquarters in the U.S., behind New York City and Chicago. One of them, Toyota Motor North America, relocated its Torrance, California headquarters and 3,000 jobs to Plano in 2017. Toyota also selected San Antonio over nine other U.S. plants this fall to invest $391 million in expanding its assembly plant."

Look, I’m not cheerleading for Texas (well, maybe a little), but those are the facts. And our factory Is sitting idle indefinitely.

 

[woodisgood]

Also raised to $1100 at New Street Capital (Pierre Ferragu)

And $939 for Piper (Alex Potter).