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

[feigen66]

Think Elon give zero F and definitely are not considering an image issue when calling giga workers off. It's a strategic decision, was just wondering why.

If we look at Trump, Bernie and Elon, we might find they share similar traits. They capture crowd because they give zero F on their self image. They will plow through anything to achieve own agenda.

While Bernie did not get nominated but his supporters are critical to the future of the left.

Not saying it is a good or bad thing but these three people do capture crowd and voice heard. It seems quite effective so far.

I do not know whether Elon's rhetoric is calculated. They maybe just follow their guts. Elon once said he only expected Tesla had 10% of success. If he is true to his rational mind then he would not actually invest it because it's less than flip coin of success rate.

 

[StarFoxisDown!]

While I do think this is a chance, we need to consider parts production, we don't know what external suppliers parts are needed and how quickly those external suppliers can ramp.

I do think China will emerge as a valuable source of parts, shipping some parts from China to the US Q3/Q4 is possible. If not Q3/Q4 this is only a matter of time IMO.

I think Tesla has probably already started the process of spinning up manufacturing of parts in China that were previously made just by US manufacturers. So the scenario you mentioned above is what I think is going to happen in Q3/Q4 to support those production rates. An entire quarter(Q2) is plenty of time to get manufacturing going for small parts

 

[troym]

I know Tesla included pictures of module and pack production in GigaShanghai but has it been confirmed it’s actually operational? I thought they were getting packs from Nevada until early summer when they expected local pack production to ramp. I don’t recall it being explicitly discussed anywhere and if it were happening already, I’d have expected them to mention it.

 

[MC3OZ]

So, kind of a technical / production question. Let’s say Giga 1 in Nevada is able to start cranking out model 3 and model y battery packs. Obviously no cars to put them in the near future so they would have to store them. What kind of maintenance is required to keep these packs healthy. I’m sure there is a systym in place but if this scenario is playing out I wonder what kind of challenges they are having. Storage etc.

Just curious.

Cheers all.

I know Tesla included pictures of module and pack production in GigaShanghai but has it been confirmed it’s actually operational? I thought they were getting packs from Nevada until early summer when they expected local pack production to ramp. I don’t recall it being explicitly discussed anywhere and if it were happening already, I’d have expected them to mention it.

I think these 2 questions are linked. Tesla previously exported packs to China from GF1, and stockpiled them.
I'm not sure about the technical requirements, but it can be done.

As far as I know Tesla is using local Chinese cells in Shanghai GF and making packs there, in particular for the new LR.
This is a pack line that was previously operational at GF1 and have been in China for some time, local Chinese suppliers only need to make cells with a suitable chemistry in 2170 format. Again I don't see anything overly difficult to achieve here.

 

[Singuy]

Tesla will blow up production after they restart. Elon did not expect to be shut down, and he most likely already has a plan to increase production beyond any possible deliveries to survive another shut down just in case. He'll do his best to hit his 500k number by the end of the year. It's pretty much spelled out in the letter.

 

[Tes La Ferrari]

View attachment 538235
TSLA chart above
View attachment 538236
QQQ chart above

Friday was day two of the push-down following the excellent ER.Ironically, if you look at the percentage of selling by shorts number in the graph below, you'll see some unusually low percentage of selling by shorts during the ER day and after. We see artifacts on Friday's daily chart that point to manipulations, and for this reason I believe that sometimes an extra-low percentage of selling by shorts number is a contrarian indicator, suggesting that mischief is likely underway but the short shares are deliberately being borrowed from non-FINRA sources to keep from drawing attention.

View attachment 538239

In any event, up through 11am TSLA was holding its own. At 10:45am both QQQ and TSLA were down about 1.6%. Alas, at 11:11am Eastern Time, Elon Tweeted "Tesla stock price is too high imo" and the bottom fell out. The NASDAQ closed down 3.2% while TSLA closed down 10.3%. The alternative uptick rule was activated for the remainder of the day and for Monday, as well. Notice the 11:30am recovery of TSLA, only to see volume pick way up and the dip restart. It is this post-11:30am dip that I think is most likely the dip that shorts/hedge funds/market makers most likely were involved in.

Notice the pre-market trading at about 750 and the hovering near 750 until the Elon Tweet. There could indeed have been some trading specifically to move the stock price toward this number for options expiration at end of day. After the Tweet dip, TSLA recovered a bit but then we see this slow progression toward 700 for the close. Again, I see this as a bit of a hedge fund/market maker manipulation.

What led up to the Tweet? Certainly, we saw Elon trying to tamp down expectations during the ER with his statements about closures being "fascist" and this statement later on in the ER:

Yeah. I should say we are a bit worried about not being able to resume production in the Bay Area, and that should be identified as a serious risk. We only have two car factories right now, one in Shanghai and one in the Bay Area, and the Bay Area produces the vast majority of our cars, all of S and X, and most of the 3 and all of the Y. So, the extension of the shelter-in-place or, frankly, I would call it, forcibly imprisoning people in their homes against all their constitutional alliance, that's my opinion, and breaking people's freedoms in ways that are horrible and wrong and not why people came to America or built this country. What the expletive [Phonetic]? Excuse me.

My take is that all of the emotional rhetoric during the ER and the similarly emotional Tweets on Friday were connected (including plans to sell all of his personal properties, which I think is a threat for Elon to personally leave California as his residence if the Fremont situation is not soon resolved). Elon sees the closure of the Fremont factory as a threat to Tesla, and he sees a soaring stock price and his being awarded over $100 million in stock options as working against his ability to negotiate a reopening of the Fremont factory and to justify the pain Tesla workers are feeling with unemployment and pay cuts/moratorium on stock-based compensation. Both the negative implications of a soaring stock price and Elon receiving a huge stock award are delayed by a dip in the stock price.

Regarding stock-based compensation, we've already heard that stock-based compensation awards are on hold at present during the crisis, but if you look at the Q1 ER numbers, there continues to be some realizing of stock-based compensation expenses that has been spread out over multiple quarters. Elon qualifying for $100 million+ in awards (even if he cannot sell those shares for years) is a bad look, particularly with employees taking cuts and the Fremont factory shut down. Even Elon's infamous "funding secured" Tweet was a calculated response to a threat (Saudis buying TSLA stock heavily on the open market rather than participating in a go private buyout as a minority shareholder). Elon is not coming unhinged. He has a very real aim for what he has been saying. Until the timetable for Fremont reopening is known, he's trying to tamp down expectations about TSLA stock and his own earnings.

I've heard some dire stock price predictions in the main thread, and I don't buy into them. True, if the macros tank, TSLA will descend with them, but I don't see this as anything inevitable. As I mentioned earlier, I think we'll hear the date of Fremont's reopening soon, in days or a couple weeks, and then battery day will add additional support to the stock price.

That said, Monday could be another down day if macros are weak and if it's true that a fair number of Teslas employees can sell some of their stock on that date. We'll see. Fortunately, the alternative uptick rule should provide some moderating function on Monday.

Regarding reopening America and avoiding a strong second wave, I am optimistic. We will have many more tools at our disposal. Abbott Labs has created an incredibly accurate antibody test with only 0.1% false positives and 0% false negatives in a large, recent test. Moreover, tests for detecting active virus are proliferating and will be plentiful in coming months. Effective test and trace is a game changer, as long as reasonable social distancing and use of masks continues. A lower percentage of people who catch COVID19 will die, due to remdesivir now being recognized as the new standard of treatment and various non-intervenous existing FDA-approved drugs are proven useful as antivirals. Tourist destinations such as Hawaii will reopen as protocols including 72 hour prior testing for the virus plus temperature checks prior to boarding the plane and arriving at destination are implemented. Companies such as Tesla will implement reasonable measures for avoiding cluster outbreaks and, if a small cluster appears, containing it quickly. America won't look the same for a while, but it will get back to work. Two large pharmacy companies believe they'll have millions of doses of their vaccine ready by September. Dr. Birx recently gave January as an aspirational date for rollout of effective vaccines. The dates differ, but at some point the virus becomes controllable and there's reason to believe that the date is before the worst of the next flu season. Meanwhile, a second shift will be added at GF3 in Shanghai, enabling more than 5K M3s/week to be built later this year.

View attachment 538237
Shorts were tagged with selling 39.9% of TSLA on Friday


View attachment 538238

For the week, TSLA closed at 701.32, down 23.83 from last Friday's 725.15. It's been a wild week with a very positive ER on Wednesday, a climb above 880 after hours, and some craziness the rest of the week. We've all ridden in this rodeo before. Hang on we'll get back to new highs when the time is right. Have a good and safe weekend.

Conditions:
* Dow down 622 (2.55%)
* NASDAQ down 285 (3.20%)
* TSLA 701.32, down 80.56 (10.30%)
* TSLA volume 32.5M shares
* Oil 19.78
* Percent of TSLA selling tagged to shorts: 39.9%

I'm sure I'm not alone when I say I appreciate your in-depth analysis and write ups @Papafox .

Keep up the great work !


Are there any other stocks that you are bullish on either over the long or short haul ?

 

[Intl Professor]

I haven't been reading, bit what is the uber insane attitude of krugerrand towards money?

I went through intense meditation training when I was a vagabond as well, but during the training's isolation I was constantly meditating so the mental ilnness didn't show. This timenI am too busy and it clearly showed that I do have some. Perhaps a lot of us have them too, but the constant social interaction kept it at bay.

I posted "sane" of Krugerrand, not insane which you read or wanted to hear. She offers extraordinary counsel these days which all of us can profit from. Like Buffet, when all hell is breaking loose all around you, keep cool, don't panic, albeit hard to do. Immanuel Kant when asked to simplify his great moral injunction, the categorical imperative, said "do what you don't want to do." I don't pretend to be authoritative about Buddha, I'm just fond of some of his phrases. If forced by one of those armed protestors, terrorists, to summarize Buddha's wisdom, "keep cool" would be my response.

One month in Thailand my wife and I shared a teacher, mine for Thai, and she for English. At my first lesson the teacher said of my wife, she is "chai yen." She has a cool heart, very calm. As Buddha has said, "all I know is from my own experience."

 

[FrankSG]

175-185k vehicles in Q3??? This is the first time I have seen anyone predict Q3 numbers in that sort of range.

I don’t think Tesla will have the supply Capacity or the demand to get anywhere near to that sort of number In Q3. That would need Fremont to significantly increase production AND require China to be at or over 5000 a week as well, both of which seem a little unlikely.

On the demand side I think shareholders need to prepare for at least some temporary softening of demand due to CV. To expect the demand for large discretionary purchases like premium cars not to be significantly impacted is not realistic. For instance here is a Gallup result showing that half of the USA upper middle class have had an impact on employment from CV.

• More than half of American adults said their employment status had been negatively affected by the COVID-19 outbreak, according to a recent Gallup poll. The effects included a loss of income (26 percent), hours being reduced (15 percent), being temporarily laid off (10 percent) and losing their job permanently (2 percent). Of the adults who were surveyed who live in households with incomes below $35,000, 68 percent said they had experienced at least one of these four negative effects. Among those in households with incomes over $90,000 per year, 49 percent said they had experienced at least one.

I'm not quite as bullish on Q3, but close. I'm predicting 130-160k for Q3, and 180-200k for Q4.

I made this post about demand a few days ago, showing that we do not have to be worried about demand whatsoever for the next few years:

I actually think there'd have to be a prolonged 40-50% reduction in demand for autos on par with the 2008 financial crisis for Tesla to be meaningfully impacted by it:

• Model Y. Demand for the Model Y is likely on the order of a million vehicles, perhaps more, per year. Even if this somehow dropped to 500k/year due to a recession, there is still no way the MY is going to be impacted whatsoever by demand constraints.
• Model 3 Shanghai. According to @DaveT most luxury brands sell about twice as many vehicles in China as they do in the US. The M3 sells about 45k per quarter in the US, so that'd be 90k per quarter in China. Early signs for demand in China are also extremely strong, and Tesla has plenty of room in margins to lower prices if necessary. The M3 could be sold for less in China than in the US. Tesla is currently building out capacity for 65k M3 per quarter in China, so assuming there is demand for ~90k per quarter in China, there'd have to be a 30%+ reduction in demand for Tesla to see any type of impact to its China business, and a 40-50% reduction for Tesla to see any meaningful impact.
• Model 3 Fremont. In the Q1'20 ER, Tesla stated that planned total capacity for 3+Y in Fremont is 500k per year, and that some production processes of the Y are shared with the 3. It sounds like that means the M3 production capacity will be reduced from 350k per year to 250k per year, with perhaps further flexibility if need be. Although this 350k/year used to include China, Tesla was also supply constrained. If these two more or less even each other out, Tesla would have to see a 30%+ reduction in non-China demand for the Model 3 to see any impact to its business. If there's more flexibility to produce MY instead of M3 at Fremont, it's even possible that a 50% reduction in demand would not impact this part of the business.
• Model S+X. These are the only vehicles that will be significantly impacted by a reduction in demand from a recession. However, S+X now make up such a small portion of Tesla's overall business, that they don't matter all that much in the grand scheme of things.

In conclusion, Tesla is more supply constrained than it's ever been, and this is going to remain unchanged for years to come.

On top of that, Cathy Woods mentioned in her YouTube video from the other day that China actually showed a small YoY increase in auto sales the other week about 3 months after the lock downs ended. Cathy argued this was likely due to some demand being pushed forward during the shut downs. If America reopens in the next month or so, the US could see a slight (although likely temporary) increase in auto demand in Q3.

In terms of production, Shanghai seems to now be producing about 3.5-4k vehicles per week on 2 shifts, and sources in China have said they'll add a 3rd shift and ramp to 5k per week in July. So for production that'd mean:

• About 1.5k S+X per week.
• Fremont 3+Y of 8k per week, soon to be 10k per week.
• Shanghai 3 of 5k per week

That's total production capacity of 14.5-16.5k per week, which adds up to 190-215k per quarter. Hence my predictions of 130-160k for Q3, and 180-200k for Q4.

 

[sdtslafan]

i trade percentages not specific prices- i could make exactly the same amount of money trading $tsla from $800 to $1600 vs $400 to $800
using foul language to get your point across is totally unnecessary
( i would not have wasted my time responding to you guys except i have a hard time ignoring a big old bully)

Trendtrader007, I’ve always appreciated your posts and thank you for keeping positive when Tesla has been in the dumps on several occasions in the past.

Just because I want to learn from your experience, do you take into account the tax implications when you decide to realize your gains? Or is it that once you sell like you mentioned you did earlier in the year, you’ve already realized the BIG tax bill so it frees you up to make decisions without much concern for additional taxes incurred? For me in CA, over 50% goes in total taxes for short term large gains so I can lose and have lost big in the past when I make a mistake.

 

[StarFoxisDown!]

I'm not quite as bullish on Q3, but close. I'm predicting 130-160k for Q3, and 180-200k for Q4.

I made this post about demand a few days ago, showing that we do not have to be worried about demand whatsoever for the next few years:



On top of that, Cathy Woods mentioned in her YouTube video from the other day that China actually showed a small YoY increase in auto sales the other week about 3 months after the lock downs ended. Cathy argued this was likely due to some demand being pushed forward during the shut downs. If America reopens in the next month or so, the US could see a slight (although likely temporary) increase in auto demand in Q3.

In terms of production, Shanghai seems to now be producing about 3.5-4k vehicles per week on 2 shifts, and sources in China have said they'll add a 3rd shift and ramp to 5k per week in July. So for production that'd mean:

• About 1.5k S+X per week.
• Fremont 3+Y of 8k per week, soon to be 10k per week.
• Shanghai 3 of 5k per week

That's total production capacity of 14.5-16.5k per week, which adds up to 190-215k per quarter. Hence my predictions of 130-160k for Q3, and 180-200k for Q4.

One thing to remember is that Tesla has said they've used the downtime at Fremont to get Model Y production ready for further ramps in production. If they can just get in 1 month of actual production in Q2 on those expanded ramped production lines to get any kinks worked out, that's why I i think Model Y production rates will be so strong and support a prediction of 8.5/week during Q3 across S/X/3/Y at Fremont. The results from Q1 have given me a lot more belief in how rapid model y production will ramp up.

The only real question mark for me is whats been mentioned above about tesla's suppliers. Hopefully Tesla has been working on mitigation plans for that for Q3

 

[JRP3]

Elon Musk is fighting the good fight for Americans.

Government and some virus can't take away our freedom.

Of course they can, and the virus can take your life. Freedom is not unlimited, never has been, probably never will be. Your first post sounds a lot like someone who was just banned...

 

[RandomJohnny]

EthicalSkeptic is another like-minded statician.

Two thumbs up for EthicalSkeptic.

 

[MP3Mike]

would definitely bet that Giga 3 will be at 5k a week by August. They're already approaching 4k a week. In fact I wouldn't be surprised if they surpass 5k/week during mid Q3.

So you are saying Tesla is under promising? Since they are saying that Gigafactory Shanghai will get to 4k/week in the middle of this year, with no guidance that it is going to go further.

They have guided that Fremont will expand from the current ~490,000/year to ~590,000/year by the end of the year.

 

[StarFoxisDown!]

So you are saying Tesla is under promising? Since they are saying that Gigafactory Shanghai will get to 4k/week in the middle of this year, with no guidance that it is going to go further.

They have guided that Fremont will expand from the current ~490,000/year to ~590,000/year by the end of the year.

Yeah I think they're underpromising. I think they've actually changed their whole philosophy around production guidance over the past 3 quarters and now only give production estimates that they are 100% sure.....and they make those estimates even more conservative just to guarantee that 100% certainty.

 

[Boomer19]

WTF are you talking about? AAPL has about 4.6B shares. TSLA has about 185M. It's more like 25:1.

that. and split isn’t the answer. split isn’t happening.

 

[Boomer19]

i’m tired of hearing about splits and advertising

someone even mentioned a reverse split. 1:7

maybe they had it backwards. but if tesla announces a 1 for 7 reverse split were all effed

7 for 1 is maybe what they meant.

NO splits. NO advertising

not YEY

 

[woodisgood]

i’m tired of hearing about splits and advertising

someone even mentioned a reverse split. 1:7

maybe they had it backwards. but if tesla announces a 1 for 7 reverse split were all effed

7 for 1 is maybe what they meant.

NO splits. NO advertising

not YEY

Ok Boomer.

 

[Artful Dodger]

For that matter, I’d like to see Tesla sell small stakes (capped at 2-3%) to legacy automakers. Again, it would send a message to potential customers that the auto industry realizes that Tesla will be around for the long run.

How would these fossil automakers PAY for those 2-3% shares? That's $3B while all the old guard are facing bankrupcy. This was never going to happen, fantasy world set aside.

Tesla doesn't neet a show of support from the legacy auto industry: What THEY need to do is ADAPT or DIE, a choice they've been putting off for more than 20 years.

So be it.

 

[ggr]

So, kind of a technical / production question. Let’s say Giga 1 in Nevada is able to start cranking out model 3 and model y battery packs. Obviously no cars to put them in the near future so they would have to store them. What kind of maintenance is required to keep these packs healthy. I’m sure there is a systym in place but if this scenario is playing out I wonder what kind of challenges they are having. Storage etc.

Just curious.

Cheers all.

After production, the batteries can be stored at half charge for many years. They don't self-drain, they only lose charge when installed in a car that is using up the charge slowly. But you don't want to store them fully charged in a hot climate. OT.

 

[Eugene Ash]

Fred at electrek has a nice scoop on a not-so-new Tesla product, the Tesla Autobidder.

Tesla has a new product: Autobidder, a step toward becoming an electric utility - Electrek

For sometime, I have been suspecting something like this would be a no-brainer. Cool to see that they have had this for about 3 years.

Essentially, when the energy production moves to solar and wind from coal and Nat gas, the biggest problem is grid stabilization. A lot of the value in this new order will be captured not by the commodity panel manufacturers, or the windfarms, or even the batteries. They're cheap, and interchangeable. And of course, Tesla can make more margins on the batteries than anyone else, thanks to their tech and scale. The real value add here is in making all these come together on the supply side to provide stable and predictable power. We have seen this happen down under, where the Hornsdale power reserve makes insane money on providing such services. I have not seen anything that says Tesla structured these contracts to get a share of the revenue, but that very likely is the case. Better still, become an utility and all the money is yours. (Yay UK)

In the US, I can see this happening in Texas, which has the most deregulated grid (ERCOT). This combined with one of the highest penetration of renewables, make the case for Tesla becoming a utility there. There's a tremendous opportunity here, and no competition to speak of.

To cap this off, when the plugged in Teslas and the whole house HVAC+water heater becomes a demand lever, Tesla can get additional payments, which would probably be shared with the vehicle / HVAC owners.

Exciting times ahead.

As someone who's team has built a rules-based billing engine [software] for electricity in one of the least regulated/most competitive generation markets - I appove this message!
I was surprised that in all the twittuffle this thread did not pick up that TSLA applied to be a utility in UK. It would certainly short-circuit Adam Jones: a sports utility vehicle company!