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

[StealthP3D]

Do you not think the steam can be completely released if/when we hit THE recession? If they keep the lid on until then, then TSLA falls with the market and they pile on making a killing on the way down yet again and then hold it down through the entire subsequent bear market and we’re stuck in another several year long trading range well below fair market value.

No skin off my back, but a lot of less convicted people are going to get frustrated and be conned out of their shares as a result and as has already happened many times here. (It’s Wednesday so it’s show a little empathy day.)

Or, do you think S&P inclusion will negate that for the most part?

Good question. The answer is I'm seeing the same thing Cathie Wood from Ark Invest is projecting - a "V" shaped recovery. There is a lot of consumption and a lot of earning that has been impacted by the shutdown. I see people getting back to work and making up for lost time. No, it won't be quick but Tesla's growth rate sure will be.

Here's the main problem with the way you are looking at it - it presupposes a demand problem. Yes it does because if people who want a new Tesla can't afford one due to a recession, that's a demand problem. I don't think there will be a demand problem, at least not one that lasts multiple quarters. Q2 may or may not be difficult (probably not much of a demand problem since production was impacted downward by the shutdown) but I don't see a Tesla demand problem in Q3 either, regardless of whether we are technically in a recession or not. Because Tesla demand is huge and growing. At worst, Tesla might have to convert a Model 3 production line to Model Y but that would be a GOOD thing because it will result in higher profits.

Likelihood of S&P inclusion is good support for the share price in anticipation of inclusion but not a fundamental driver of value. I see the value of inclusion as a much broader base of shareholders going forward which will add a measure of price stability and make it more difficult to manipulate the share price so easily.

 

[Todd Burch]

Who's in the mood for a nice gradual walkdown? Bueller? Bueller?

 

[adiggs]

Despite the fact that I think there's clear evidence that Wall st wants a trading range to make money on both sides of the trade, I do think if Tesla executes on their business and growth, there will be no trading ranges going forward. Wall St got lucky that the Covid outbreak happened when it did and even then Tesla executed so well that they still had huge revenue growth over Q1 2019 and was profitable. The 5 year trading range we were stuck in was definitely aided by Tesla's missteps with the 3 ramp, Giga1 ramp, etc..... which made revenue growth very lumpy and uneven and losses lingered on much longer into the ramp than initially thought. The tax credit reductions were constant used as fear mongering about demand. I for one am very glad the EV tax credit is gone at this point.

It will be much harder to keep a trading range on a stock when the company is executing on profitability and revenue growth consistent. If I had to guess we're lacking any real buying volume because buyers are worried that a outbreak could happen at the factory at any point in Q2.

I agree with most of this - like the various stuff that aided maintenance of the previous trading range.

However, I think it's impossible for any company to avoid a trading range. I think of a trading range as a price below which you need something extraordinary to go to (a macro economic shock such as the Great Depression, evidence of accounting fraud), and a price above which you need something extraordinary to reach (such as a surprise profitable quarter after Q3 last year) OR sustained excellence that shows up as GAAP profits (it's easy to calculate company value when there's GAAP EPS, and a lot of investors rely on that to make decisions, and a lot more investors that won't invest without them and only invest based on them).


Valuing growth companies is tricky as the usual measures of value need to be replaced with alternative measures of value. I DO think that investors are getting better at valuing growth companies, but I also think that's a long ways from being good at it. My own valuation of Tesla doesn't come from financial measures (much) - it comes from qualitative measures having to do with the product, the mission, the strategy, and the size of the markets I see Tesla disrupting (and the belief that eventually, this will all show up as significant EPS).

I do also believe that TSLA share price will come untethered from it's then-current trading range, and head off to a new trading range again and again. I've seen (and held through) it happen 4 times so far with varying sizes of trading ranges, movements, and time periods:
25/35 -> 130/180
130/180 -> 180-280
180/280 -> 280-380
280/380 -> ?-900 (my guess is 700 - 900)

Two of these new trading ranges were disconnected from the previous trading ranges. I don't know what the next trading range will be, and it's my fear / expectation that the next trading range can be that 6x change like the first one that makes it easy for me to buy and just hold, waiting for that next reset.


However, once that new trading range is reached, we'll enter into a new range - TSLA won't just keep going up, nor will it go back to $0 on it's way to $5000. Thus - trading ranges will be with us always.

Also worth noting - I sort of don't think we'll have another 5 year trading range like the one we just left; new trading ranges like this one will end << 5 years.

 

[StarFoxisDown!]

Good question. The answer is I'm seeing the same thing Cathie Wood from Ark Invest is projecting - a "V" shaped recovery. There is a lot of consumption and a lot of earning that has been impacted by the shutdown. I see people getting back to work and making up for lost time. No, it won't be quick but Tesla's growth rate sure will be.

Here's the main problem with the way you are looking at it - it presupposes a demand problem. Yes it does because if people who want a new Tesla can't afford one due to a recession, that's a demand problem. I don't think there will be a demand problem, at least not one that lasts multiple quarters. Q2 may or may not be difficult (probably not much of a demand problem since production was impacted downward by the shutdown) but I don't see a Tesla demand problem in Q3 either, regardless of whether we are technically in a recession or not. Because Tesla demand is huge and growing. At worst, Tesla might have to convert a Model 3 production line to Model Y but that would be a GOOD thing because it will result in higher profits.

Likelihood of S&P inclusion is good support for the share price in anticipation of inclusion but not a fundamental driver of value. I see the value of inclusion as a much broader base of shareholders going forward which will add a measure of price stability and make it more difficult to manipulate the share price so easily.

Yeah Q3/Q4 are going to be huge pillars for a rally much higher because demand is fundamentally not a problem for Tesla's production rates for the rest of this year....especially with Model Y just starting it's production ramp. I'm very confident Tesla can run full production rates out of Fremont/Giga 3 in Q3/Q4 and they'll sell everything they make.

Q3/Q4 revenue, margin, and profits will make the share price today look like the steal of the year.

 

[StealthP3D]

I think you have to pay him money to get access to the real electronics experts on his staff the cogent insights.

FTFY

 

[StarFoxisDown!]

I agree with most of this - like the various stuff that aided maintenance of the previous trading range.

However, I think it's impossible for any company to avoid a trading range. I think of a trading range as a price below which you need something extraordinary to go to (a macro economic shock such as the Great Depression, evidence of accounting fraud), and a price above which you need something extraordinary to reach (such as a surprise profitable quarter after Q3 last year) OR sustained excellence that shows up as GAAP profits (it's easy to calculate company value when there's GAAP EPS, and a lot of investors rely on that to make decisions, and a lot more investors that won't invest without them and only invest based on them).


Valuing growth companies is tricky as the usual measures of value need to be replaced with alternative measures of value. I DO think that investors are getting better at valuing growth companies, but I also think that's a long ways from being good at it. My own valuation of Tesla doesn't come from financial measures (much) - it comes from qualitative measures having to do with the product, the mission, the strategy, and the size of the markets I see Tesla disrupting (and the belief that eventually, this will all show up as significant EPS).

I do also believe that TSLA share price will come untethered from it's then-current trading range, and head off to a new trading range again and again. I've seen (and held through) it happen 4 times so far with varying sizes of trading ranges, movements, and time periods:
25/35 -> 130/180
130/180 -> 180-280
180/280 -> 280-380
280/380 -> ?-900 (my guess is 700 - 900)

Two of these new trading ranges were disconnected from the previous trading ranges. I don't know what the next trading range will be, and it's my fear / expectation that the next trading range can be that 6x change like the first one that makes it easy for me to buy and just hold, waiting for that next reset.


However, once that new trading range is reached, we'll enter into a new range - TSLA won't just keep going up, nor will it go back to $0 on it's way to $5000. Thus - trading ranges will be with us always.

Also worth noting - I sort of don't think we'll have another 5 year trading range like the one we just left; new trading ranges like this one will end << 5 years.

While yes, the majority of stocks/companies go through trading ranges and pause for sometimes long period in those trading ranges there are plenty of examples of stocks that never stayed in a trading range for years...or at least only stayed in a trading range for the period of a quarter before the trading range moved higher and the trading range never returned to those earlier levels. Main thing is execution from the company and luckily for us, Tesla has completely stepped up to the plate when it comes to reaching their goals on time and/or actually earlier than expected. The missteps and ramp issues seem to be very much in the past at this point.

 

[adiggs]

It does seem the thread has an unhealthy and impatient fixation on the exact share price at any given moment though.

I liked the old structure (several years back) where we had a short term and long term thread. The long term thread got almost no traffic with even long term stuff posting to the short term thread.

So that's the lovely dynamic in our new thread structure - we get a melange of short term thinking and price fixation, mixed in with long term strategy and execution thinking with general indifference to individual quarterly results, all wrapped up together in this one thread.


I like thinking of the new version of this thread as a free for all, with people taking topics they find interesting out to other threads. Whether that happens or not, it makes it easy for me to read about 2 pages in 10-30 of this thread

 

[Papafox]

My max pain calculator has max pain this week at $800. The OI walls are at 700 and 900 (with a pretty big one at 850). More importantly, there is amazingly large volume today (seems to be typical for TSLA the final week to expiration, week after week) at:
- 900 calls (over 8k contracts traded today)
- 850 calls (nearly 11k contracts traded today)
- 820 calls (largish volume at 4k contracts today)
- 800 and 820 puts (largish volume at 3k each)

I expect OI walls to spring up at 800, 820, 850 and 900 (call side), and 700, , 750, 760, 790, and 800 (put side), with much bigger OI walls on the call side. Also more calls this week than puts.

There are some big bets north of $850, and some largish (but much smaller) bets at a 800-820 finish for the week, with max pain currently 800 (it can and will change throughout the week).


All data from Stock Option Max Pain.

Previous conversation indicates this data is different from opricot.com. I can't compare them as the machine I'm using to grab this data has opricot flagged as a no fly zone for me, and it hasn't been worth the energy to me to access the site from another machine.


My interpretation - 800-820 closing range for Friday, with option sellers looking for as close to 800 as they can get.

Ah, just one question... What's an OI Wall?

 

[StealthP3D]

Everyone points to the incredible rally from 300 to 900 but if you extend the trading chart to the beginning of the 5 year trading range, the annual returns aren't that spectacular.

That is a false comparison because it cherry-picks the starting point of the comparison. Who said Tesla was fairly valued 5 years ago?

Considering the very significant risks that were in front of them, I thought they were wildly overvalued. Yes, to such a degree that I couldn't buy a single share. In fact, considering the sizeable risks they faced, I thought shares were wildly overvalued from the day after the IPO.

Starting around the beginning of 2019 TSLA became reasonably valued, IMO. Then it went wildly undervalued through the middle of the year. I think people thinking history will repeat itself are doing some seriously wrong-headed thinking.

But, you place your bets (or not) and reap the rewards (or not).

 

[Papafox]

Someone correctly pointed out that TSLA wasn't the only stick trading with a downward slope this afternoon, even though the macros were still strong. Here are charts for SQ, ARKK:, and TSLA:

SQ above

ARKK above

TSLA above

edit: for reference sake, here's qqq


You can see how both SQ and ARKK reversed and started heading up about 1pm. Looks like TSLA wants to climb too but is being constrained (semi-capped?). Someone doth playeth with our stock price, methinks.

 

[adiggs]

My max pain calculator has max pain this week at $800. The OI walls are at 700 and 900 (with a pretty big one at 850). More importantly, there is amazingly large volume today (seems to be typical for TSLA the final week to expiration, week after week) at:
- 900 calls (over 8k contracts traded today)
- 850 calls (nearly 11k contracts traded today)

Quoting myself (past the edit window anyway)...

And where do the Buyers of those 850 and 900 calls come from anyway? Those buyers (19k contracts, covering 1.9M shares) need the share price to go above 850 (11k contracts, or 1.1M shares) to make money at expiration or a sharp fast move early in the week to sell the options early, to make money. The 900 calls are even further out and even worse risk/reward.

These are HUGE bets. It's easy for me to see where the sellers come from - I can readily see myself as a seller of those options (I'm not - my sales are the 1000 strike, call side).

These sizes of bets are either hugely directional (big money looking for big money in < 1 week from a big move in the share price), or huge hedges being rolled over week to week (this volume level has happened the 3 weeks in a row I've known to look for it).

The thing is - the size of these bets aligns the market around not reaching these price levels.


Anybody with an idea what entity in the market would want to buy calls in these volumes, at these strikes, with a sub 1 week duration?

 

[StarFoxisDown!]

That is a false comparison because it cherry-picks the starting point of the comparison. Who said Tesla was fairly valued 5 years ago?

Considering the very significant risks that were in front of them, I thought they were wildly overvalued. Yes, to such a degree that I couldn't buy a single share. In fact, considering the sizeable risks they faced, I thought shares were wildly overvalued from the day after the IPO.

Starting around the beginning of 2019 TSLA became reasonably valued, IMO. Then it went wildly undervalued through the middle of the year. I think people thinking history will repeat itself are doing some seriously wrong-headed thinking.

But, you place your bets (or not) and reap the rewards (or not).

It's not cherry picking, its the defined range from which Tesla stayed with a low and a high for 5 years. It was a very obvious range that was tested multiples time and the stock stayed within that range, both at the bottom and at the top.

Whether or not Tesla was overvalued or not at the beginning of the range(it was overvalued for sure) wasn't my point. My point was that a thought process of "the stock went from 300 to 900 in 3 months....its very unlikely it goes to say 1,200 by Q3 and more likely to go back down or that it's going to stay in a say 600-900 range for a while" to me is a bad assumption because the 300 level wasn't even remotely close to fair value of the stock

So in essence saying you really have to look at the 200% appreciation in the stock as 200% over the past 5 years....not really the past 3 months

 

[Reductionist]

Gigafactory 3 is running at full tilt: loading bays are almost all occupied, outbound logistics lot is filled

Overview of the current state of construction:
The extension of Phase 1 is being closed up, foundations are being built next to the battery workshop, roofing on Phase 2 has started.
It looks like the main building of Phase 2 (center of image) will stay as two parts, maybe separating GA form BIW / paintshop? Any ideas what the buildings on the right will be used for? Maybe cell production?

 

[mongo]

Ah, just one question... What's an OI Wall?

Open Interest wall. Where there is a whole lotta contracts at one strike and thus a huge cost/ number of shares in play if the Stock Price crosses that point.

 

[StealthP3D]

I agree with most of this - like the various stuff that aided maintenance of the previous trading range.

However, I think it's impossible for any company to avoid a trading range. I think of a trading range as a price below which you need something extraordinary to go to (a macro economic shock such as the Great Depression, evidence of accounting fraud), and a price above which you need something extraordinary to reach (such as a surprise profitable quarter after Q3 last year) OR sustained excellence that shows up as GAAP profits (it's easy to calculate company value when there's GAAP EPS, and a lot of investors rely on that to make decisions, and a lot more investors that won't invest without them and only invest based on them).


Valuing growth companies is tricky as the usual measures of value need to be replaced with alternative measures of value. I DO think that investors are getting better at valuing growth companies, but I also think that's a long ways from being good at it. My own valuation of Tesla doesn't come from financial measures (much) - it comes from qualitative measures having to do with the product, the mission, the strategy, and the size of the markets I see Tesla disrupting (and the belief that eventually, this will all show up as significant EPS).

I do also believe that TSLA share price will come untethered from it's then-current trading range, and head off to a new trading range again and again. I've seen (and held through) it happen 4 times so far with varying sizes of trading ranges, movements, and time periods:
25/35 -> 130/180
130/180 -> 180-280
180/280 -> 280-380
280/380 -> ?-900 (my guess is 700 - 900)

Two of these new trading ranges were disconnected from the previous trading ranges. I don't know what the next trading range will be, and it's my fear / expectation that the next trading range can be that 6x change like the first one that makes it easy for me to buy and just hold, waiting for that next reset.


However, once that new trading range is reached, we'll enter into a new range - TSLA won't just keep going up, nor will it go back to $0 on it's way to $5000. Thus - trading ranges will be with us always.

Also worth noting - I sort of don't think we'll have another 5 year trading range like the one we just left; new trading ranges like this one will end << 5 years.

I think it's a mistake to think a speculative growth stock will behave in any manner similar to the stock in a large, multi-nation manufacturing conglomerate working multiple industries simply because they happen to have the same name.

Tesla is a much different company today than it was even 2 or 3 short years ago and I expect the share price movements to take on very different patterns.

 

[Mo City]

Q3/Q4 revenue, margin, and profits will make the share price today look like the steal of the year.

Why doesn't everyone see this clearly?

Q1 2021 brings mass production of the Y in Shanghai. During 2021, Shanghai should achieve near 10K/week (500K/year).
Q3 2021 Berlin should begin Y production.
Q4 2021 or Q1 2022 Hutto will start Y/Cybertruck assembly.

Over the next 24 months, revenue will significantly increase and margins should remain solid.

I'm not even fully considering the improvements Battery Day will reveal.

The run is not close to leveling off. Daily stock gyrations aren't meaningful in the big picture.

 

[ZeApelido]

When insinuating manipulation of the stock, I would suggest comparative plots relative to SPY, Nasdaq, and some auto index before proclaiming some Tesla-specific positive or negative influence.

 

[SOULPEDL]

Anyone know if our Model 3's (or Y) can still have their battery swapped out fairly quickly?

Assuming they are, I just see Elon throwing the switch on turning my car into a car/powerwall much sooner than V2G is equitable at scale. And if that happens, Powerwall sales could shift to solar roofs. The cross-sales of a car/solar would be a new product all together. However, what about the car battery warranty?

If the 1M mile battery is near (along with FSD), who wouldn't upgrade if you're also interested in solar? The cost for a battery recycled and upgraded would equal the price of just 1 powerwall ($8K to quote Elon). So buy solar, and throw in the new battery for your Model 3 maybe?

And what if their goal was to refurbish ALL of our batteries eventually - there would be no "old" warranties to cover. An EV with 1M miles vs 300K is worth 3x in carbon savings. So upgrade your battery and your car value would also rise by more than the cost of the upgrade? Maybe.

IMHO, Battery Day will present a compelling case on a guaranteed growth trajectory about to unfold over the next 9 months. For now, I don't think I need to worry about warranty on my car battery. And our 2 PWs are going to be collector items but will be handy if the car is away and the power cuts off, at night...

I am so freakin bullish! But I just rolled my one and only option from Jan '21 to Jan'22. Hang on for a wild ride in the meantime!

 

[StealthP3D]

It's not cherry picking, its the defined range from which Tesla stayed with a low and a high for 5 years.

That's the very definition of "cherry-picking".

So in essence saying you really have to look at the 200% appreciation in the stock as 200% over the past 5 years....not really the past 3 months

I can cherry-pick too:

So, in essence, you really have to look at the 2,155% return going back to 2/25/2013. See how the appreciation changes when I add only a little more than 2 years to the starting point?

 

[kengchang]

Anyone know if our Model 3's (or Y) can still have their battery swapped out fairly quickly?

No, the bolt goes from inside of the cabin to attach the battery pack