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

[davecolene0606]

I believe @Curt Renz 's source the other day said the 7-day notice is public knowledge, not just to the index funds, e.g. a press release.

I searched for Twitter's inclusion and found this story 2 days before it was added to the S&P 500:
Twitter to join S&P 500 stock index, giving stock price a boost.

From a link in the story:
"NEW YORK, June 4, 2018: S&P Dow Jones Indices will make the following changes to the S&P 100, S&P 500 and S&P SmallCap 600 effective prior to the open of trading on Thursday, June 7:  Netflix Inc. (NASD: NFLX) will replace Monsanto Company (NYSE:MON) in the S&P 100, and Twitter Inc. (NYSE:TWTR) will replace Monsanto in the S&P 500. Bayer Aktiengesellschaft is acquiring Monsanto in a deal expected to be completed soon pending final conditions."

So that was actually 2 days notice (announced after the market close Monday, changes made Thursday before the open).

Here's another more recent example, also with 2 days notice (NOW)...
Thermo Fisher Scientific Set to Join S&P 100; ServiceNow to Join S&P 500

Here's a story about Tesla's potential inclusion from Barron's yesterday...
Tesla Stock Looks Like It’s Joining the S&P 500. Here’s How to Calculate the Impact.

"Tesla stock’s potential inclusion in the S&P 500 index has Tesla bulls buzzing. Index inclusion is a good thing, but it isn’t everything. There are a few things to consider before buying Tesla stock ahead of any indexing announcement. For starters, index inclusion isn’t guaranteed, but second quarter delivery estimates, which smashed Wall Street expectations, makes inclusion look increasingly likely.
...
Beating an estimated per-share loss of $1.58 seems easy. So does positive earnings over the past 12 months. The tougher criterion to meet for index inclusion looks to still be positive earnings per share in the most recently reported quarter. There is, however, the matter of the global pandemic. Even if Tesla doesn’t turn a profit S&P officials have discretion. “The committee can use its discretion when it makes sense,” said an S&P spokesperson to Barron’s. Still, there is no guarantee such discretion will be exercise
...
Investors could be forgiven if they thought Tesla was in the index already. The company is bigger, by market value, than every other auto component of the S&P combined. What’s more, Tesla’s market value would be just outside the top 20 companies in the entire index. Tesla is, in short, an electric vehicle behemoth."

(Emphasis mine).

An interesting part of the Barron's article was this:
Adding in Tesla, while bumping out another company, would give Tesla roughly a 0.8% index weight. (Barron’s didn’t adjust for other factors like float—share available for trading.)" (emphasis mine)

I think float matters here a lot and it seems Fact Checking (twitter) is barking up that tree.

Fire Away!
(its STILL the batteries, Stupid!)

 

[Steve m]

You might want to wait until after the Q4 P&D report, rather than Jan 1

Pretty sure the markets aren't open on New Years Day.

 

[Etna]

If GAAP positive Q2 results are announced late this month,

When would TSLA inclusion to the S&P500 index be announced and when would it be added?

I thought I could find a good example by looking up Twitter inclusion publicly announced on June 4th, effective June 7th 2018, and was startled to discover - I am sure it has been discussed here but I missed it - that only two profitable quarters had been declared at that point, with the expectation of profitable quarters going forward (sounds familiar).

So here is a good example that inclusion really is at the discretion of the committee, and timing is anyone's guess. Given the stakes and the market cap, my guess is that they will wait for the quarterly report (July 30th?) which would mean inclusion on Monday, August 10th with an announcement a few days earlier.

 

[Curt Renz]

ARK CEO Cathie Wood today retweeting her analyst Sam Korus from Wednesday:

 

[Prunesquallor]

Tesla CyberTruck Officially Opens Reservation For China Market

Tesla CyberTruck Officially Opens Reservation For China Market

 

[LTC_RRR]

Assuming that the bottle in front of you is some kind of alcoholic beverage, and alcohol kills brain cells, is there a difference?

Yes, there is a difference. The brain cells, in the bottle in front of me instance, stay inside the skull; in the lobotomy instance, the cells are removed from within the skull

 

[Mo City]

This place is a mess, my portfolio has gone to hell. Just sold the last of my $TSLA shares and bought gold. Can't afford to even visit Krug's island. Sorry @Unpilot, you are on your own now. Sigh.

Allow me to state the obvious that $485 may represent a much bigger buying opportunity for TSLA than selling. The upside over the next 2-3 years is massive. There is no company on planet earth like Tesla. This ordeal could be a game-changer that significantly widens the gap between them and the rest of the automotive industry. Not to mention the coming growth in energy storage. Solar? We'll see.

IMO, when we look back on 2020, Battery Day and now COVID-19 will both be giant landmarks in Tesla's history that accelerated it's dominance.

The TSLA ride isn't for the faint of heart. You may regret jumping off after a 50% decline.

The above posts are from April Fool's Day.

Some things age well.

Some things don't (and I mean REALLY don't).

 

[hobbes]

Indeed, on Tuesday, Todd Rosenbluth (CFRA head of ETF and mutual fund research) responded to my queries about announcements of S&P 500 additions. Todd held the identical position at S&P Global Market Intelligence before it was bought by CFRA. Below are his responses. The second one was after I asked for clarification that the announcement is published for everyone and not initially for only fund managers.

Happy to help. ETFs learn typically a week before a stock enters the index and will build a position in advance of it being added formally to cushion the impact.

Everyone at same time. Usually with 7 days notice.

Didn´t someone else here say the funds can only buy after TSLA actually enters the index? Was that for a different kind of fund or by mistake? Sounds like you don´t get a better source of information on that than Curt´s here, so I wouldn´t doubt his statement.

 

[heltok]

Tesla CyberTruck Officially Opens Reservation For China Market

Tesla CyberTruck Officially Opens Reservation For China Market

The market for pickups is huge in other Asian countries, for example in Thailand, pickups are considered a luxury vehicle and many people buy them without the specific need of it. With trade agreement between Thailand and China, the Cybertruck would be insane value in Thailand. Once China has been saturated I expect a lot of Teslas to be exported to the rest of Asia and Cybertruck seems like the perfect vehicle to scale for export en masse.

I wonder if Tesla could build a Cybertruck factory in China to be ready at the same time as in Texas? Even faster?

 

[hobbes]

5 Boat coming to SF as of today:

Tesla Carriers

For the same time frame in the quarter (of arrival dates at SFO) this is the same number of ships as in Q1 so far.

 

[Prunesquallor]

The market for pickups is huge in other Asian countries, for example in Thailand, pickups are considered a luxury vehicle and many people buy them without the specific need of it. With trade agreement between Thailand and China, the Cybertruck would be insane value in Thailand. Once China has been saturated I expect a lot of Teslas to be exported to the rest of Asia and Cybertruck seems like the perfect vehicle to scale for export en masse.

I wonder if Tesla could build a Cybertruck factory in China to be ready at the same time as in Texas? Even faster?

Cybertruck convoys to the Port of Houston, I’d guess. At least for a while.

 

[CorneliusXX]

Tesla CyberTruck Officially Opens Reservation For China Market

Tesla CyberTruck Officially Opens Reservation For China Market

So how long until we see Phase 3 videos of GigaShanghai?

 

[joh01652]

I didn't worry about taxes before because I didn't sell (because I do not know when not because I'm super stubborn). Now when everyone is teasing with those parabolic movements I'm starting to think about taxes. I remember someone here mentioned sometime in Jan about special vehicles for taxes that start making sense from a particular amount but I can not find it in gazillion posts. Would be super appreciative is someone points me in the right direction (in PM or publicly). Maybe a dedicated tax thread even? I think it might be getting more and more relevant for many here.

Ya I’m down for a dedicated tax thread. I’m up waaay too much day trading in my first year of doing this, and I’ve tried contacting my tax guy but he’s slammed due to the Covid tax extension that ends july 15. It’s gotten to the point that i need to stop reading tesla news and start learning about what tax structure is best for day trading

 

[wipster]

So how long until we see Phase 3 videos of GigaShanghai?

Yeah, I'm betting Phase 3 Shanghai could be making Cybertrucks much more quickly than TeraTexas!

 

[Tslynk67]

Didn´t someone else here say the funds can only buy after TSLA actually enters the index? Was that for a different kind of fund or by mistake? Sounds like you don´t get a better source of information on that than Curt´s here, so I wouldn´t doubt his statement.

For funds tracking the S&P500 that makes sense, no? Can't buy a stock that's not in the S&P, even if you think it might be added, until it is added.

On this basis there's no doubt that at some point, between now and sometime in the not-too-distant future, there's going to be enormous buying of somewhat limited shares.

Any short seller with and ounce of brains (debatable) must know this and would surely look to exit now - unless they really think maybe, perhaps, there's no profit for Q2, which judging by Elon's Tweets yesterday I judge to be less than zero probability.

I sold a $1200 covered call Friday and allowed it to stay though close. Gives me around $200k cash on Monday, I'm buying more LEAPS with that - these seem to bring the best returns.

Now which LEAPS to buy for the best 6 month payback, that's more of a mystery, any suggestions welcome...

 

[MP3Mike]

(?) 50% of its fixed assets and revenues generated in the U.S. (Probably but can't find specific source)

Clarification on that condition from: https://www.spglobal.com/spdji/en/documents/methodologies/methodology-sp-us-indices.pdf

Domicile. Only common stocks of U.S. companies are eligible. For index purposes, a U.S. company has the following characteristics:

1. Files 10-K annual reports.
2. The U.S. portion of fixed assets and revenues constitutes a plurality of the total, but need not exceed 50%. When these factors are in conflict, fixed assets determine plurality. Revenue determines plurality when there is incomplete asset information. Geographic information for revenue and fixed asset allocations are determined by the company as reported in its annual filings.
3. The primary listing must be on an eligible U.S. exchange as described under Exchange Listing below.

If criteria #2 is not met or is ambiguous, S&P Dow Jones Indices may still deem it a U.S. company for index purposes if its primary listing, headquarters and incorporation are all in the U.S. and/or a “domicile of convenience” For further information on domiciles of convenience, please refer to S&P Dow Jones Indices’ Equity Indices Policies & Practices Methodology.

So that condition seems to be met.

 

[mongo]

I thought I could find a good example by looking up Twitter inclusion publicly announced on June 4th, effective June 7th 2018, and was startled to discover - I am sure it has been discussed here but I missed it - that only two profitable quarters had been declared at that point, with the expectation of profitable quarters going forward (sounds familiar).

So here is a good example that inclusion really is at the discretion of the committee, and timing is anyone's guess. Given the stakes and the market cap, my guess is that they will wait for the quarterly report (July 30th?) which would mean inclusion on Monday, August 10th with an announcement a few days earlier.

Twitter met the criteria of the last quarter being profitable and the sum of the previous 4 being profitable. So there was not really any discretion required. They also had many years of non-GAAP profitability and cash flow which didn't hurt.

Twitter's Q1 2018 results came out April 25. The inclusion announcement was 40 days later. August 10 is only a little over a week after Tesla's report, seems too fast.

 

[MP3Mike]

While I agree the committee is the wild card, people should be aware that they also meet on an "as needed" basis. I mention this because it's my opinion that getting TSLA into the index sooner, rather than later, would be most advantageous to the goals of the Committee. I think the most likely scenario is an announcement within a week or two of Tesla announcing a quarterly profit.

What do you think the committee will require for the reporting of profit? Will the initial earnings release be enough or would they wait until the fully-audited 10Q/K is released later? (Not that there is much difference lately, what 1 day for 20Q1, and ~2 weeks for 19Q4.)

 

[Thumper]

It is possible that they can make Cybertrucks in phase II structure at the China Giga Factory. It is enormous and could accommodate surprises.

 

[powertoold]

It is possible that they can make Cybertrucks in phase II structure at the China Giga Factory. It is enormous and could accommodate surprises.

There's no way phase 2 is only for Model Y, which uses 70% of the same parts as 3. The phase 2 building seems to be taller as well.