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

[Hock1]

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

If your long term plan is based on day trading, you will be very fortunate to have to worry about taxes, IMO. Other than that, as a general matter, my experience is that it is rarely wise to make investment decisions based on taxes.

 

[Thumper]

To increase margins, Tesla could offer some of the options other manufactures have used over the years. Incredibly OEMs have been able to charge extra for vinyl roofs, racing/rally stripes, shark logos, wire wheel hub caps, spoilers on non performance cars, hood scoops, gold tone anodized aluminum trim and many other non-value but high cost "Editions". No need for inconvenient and costly engineering, just ad some junk and market it. There's one born every minute.

 

[ZachF]

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!)

Tesla should IMHO, cap raise into the new index demand. Build the Terafactory.

 

[The Accountant]

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 is released later? (Not that there is much difference lately, what 1 day for 20Q1, and ~2 weeks for 19Q4.)

The 10Q's (for Q1, Q2 and Q3) are unaudited and as such, they are released very soon after earnings are announced (as you said about a day later).
In Q4 the Annual 10K is Audited and this takes a couple of weeks after earnings are announced.
Here is the Q1 10Q labeled as "Unaudited"

Alhough the 10Qs are not audited, PwC reviews the financials to determine that the accounts look reasonable. They interview management to get explanations for variance to prior year and prior quarter and if there is a material item, they may perform some testing. This brief review allows for the 10Q to be published quickly.

 

[replicant]

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

View attachment 560134

Am I the only one bothered by the tone of this tweet? I'm probably as excited by the ride-hailing network and robotaxi as Cathie, but one can understand why many perceive Tesla investors as seriously lacking skepticism or displaying too much blind cheerleading.

Even Gally seems more professional these days... Ark people should try harder to take a step back and sound more like Rob Maurer (from th excellent Tesla Daily podcast).

 

[mickle]

Whenever they call a meeting. I wonder if the meeting minutes are made public? I doubt it.

Maybe they've already had the meeting, and decided to add TSLA to the index the same day the earnings report comes out, assuming the numbers are good.

 

[tinm]

A lot of chat about when to sell. As dollar cost averaging works well when purchasing shares, it should also work well when selling. Upon retirement from one to three years from now, my plan is to sell 1/40th of my shares every year on January 1st. Dollar cost averaging is my long term exit plan. I'm posting this on my fridge. I'd be an absolute fool not to stick with this plan, and @StealthP3D, no need to remind me what blunder I did last May!

Let’s say N is number of shares and N starts at a hypothetical 1000:

Year 1: .025*N = 25. Now N=975.
Year 2: .025*N = 24.375. Now N=950.625.
Year 3: .025*N = 23.765. Now N=926.86.
Year 4: .025*N = 23.17. Now N=903.69.
Year 5: .025*N = 22.59. Now N=881.10.
etc

So number of shares sold each year would gently drop per year, but one assumes the stock price will keep rising for a good long time, making this an interesting plan.

Question is, what would the starting value of N need to be for a given person to adopt this plan? It’d vary from person to person for sure. Given where TSLA is priced now, starting N=1000?

 

[ZeApelido]

People's minds might have changed a bit in a few weeks.

Now when do you think TSLA will first reach $2000? Vote:

When will TSLA first reach $2000 / share - StrawPoll

Amazing how much a few weeks changes sentimentality

In the previous poll, almost 40% of voters thought TSLA wouldn't hit $2000 until basically 2022 or later. That changed to 3% in this poll

Previously, say about 10% thought it could happen before the end of this year. That went up to 32%.

1st half 2021 went from about 28% to 38% of the vote.

 

[Causalien]

I don’t know if a stock split is necessarily good for option buyers and sellers. In a 10 for 1 split you’ll have to pay 10 times as many option fees for the same trade. I’m currently selling or buying 10 options at the same time and not really looking forward to paying 100 fees (although there are some discounts with higher numbers)

There is a sweet spot between 7 to 20 contracts for me.

 

[mongo]

Tesla should IMHO, cap raise into the new index demand. Build the Terafactory.

Giga Berlin is only a billion (some of which may be loans).
Tesla had $8B on hand at the end of Q1. Plus positive cash flow. A cap raise is not going to accelerate anything currently underway.

 

[ByeByeJohnny]

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.

But isn't almost every fund part of a brokerage/bank or some other entity? So if they are convinced that Tesla will be included in x weeks/months can't they buy stock in some other account and then sell it to their index funds at the exact stock price Tesla has when included in the index? That way the funds would get the 'correct' price to start with and avoid the 'stampede' the week before.

Sure there is a risk that the stock could go down but any stock that looks to be included in an index should be more likely than not to beat the average stock market. And if it goes up that's profit they can keep to themselves instead of giving it to the fund.

I can't really see much negative for anyone doing it this way.

 

[Artful Dodger]

You're assuming Lodger that MSFT does not grow in the next 4 years... possible, but not probable. Could was though!

So that's why I specified $8K in current prices (yeah, not the clearest explaination).

Over the past 5 yrs, TSLA has outperformed MSFT by 2.62x so making the assumption of continued growth by both equities at those historic rates, the overtake would occur in July 2027 (7 yrs):

MSFT:
$1,560B*2.6185^(7/5) = $6.00T in July 2027

TSLA:
$230B*10.4951^(7/5) = $6.18T in July 2027​

While certainly possible, that's not what I was driving at. My OP / prediction was based on simple linear growth of TSLA @ $1,700 / yr and compounding burying the meager growth MSFT will achieve over that time. Very rough estimate.

So in fact, July 2024 is more of a heuristic estimate, giving ample time for the full completion to scale at Giga Shanghai, Berlin, and Austin/Tusla (TBD). I think that's extremely doable in 4 yrs and the Market will love it.

Further, in that timeframe I do expect the Tesla China Design Centre will bear fruit with a Model 1" World Car, and begin production at GF6/China which will ultimately build ~10M units per year. And the Market will know it

Cheers!

 

[capster]

Hmm, that doesn't make a lot of sense to me. My broker charges $9.95 USD per trade, regardless of the number of shares traded. Shirley large 'tutes are using IB or similar with $1/trade fees.

The problem with a 10:1 share split is it effectively increases the cost of Options by 10x as well, since each Options contract represents 100 shares and has a fix cost at the brokerage. In my case, buying a $20/contract now means about 20 cents per share overhead to trade options. After a 10:1 split, that'd be equivalent to a fee of $2/share. Good for brokers, not so good for retail investors.

I think there's a middle ground, but I'm not sure what that is. 10x does seem like the most likely though for a number of reasons, doesn't it?

Cheers!

Personally, I’d like to see people get used to a comma in the TSLA share price for long enough that people unconsciously expect it to return not that that long after the split. So, I’d recommend waiting on the split till we’re comfortably at some point in the $2K to $3K+ range for a while.

Also, I’m more than happy with this latest rise in price and see good things on the horizon, so I question the need for it just now.

Finally, there is something a bit, I dunno, manipulative about splits sometimes and I’m not sure either Musk or Tesla want or would benefit from that look now.

At a guess, I’d be looking for a 10 to 20x split in about the earlyish 2022 +/- timeframe.

 

[AlMc]

Will GF China be producing Tesla CyberTrucks before a foundation is poured in the Austin or Tulsa areas or any model product coming out of GF Berlin?

 

[wipster]

So that's why I specified $8K in current prices (yeah, not the clearest explaination).

Over the past 5 yrs, TSLA has outperformed MSFT by 2.62x so making the assumption of continued growth by both equities at those historic rates, the overtake would occur in July 2025 (5 yrs). Certainly possible, but not what I was driving at.

My OP / predition was based on assuming simple linear growth of TSLA @ $1,700 / yr but compounding burying the meager growth MSFT will achieve over that time. Very rough estimate.

So in fact, July 2024 is more of a heuristic estimate, giving ample time for the full completion to scale at Giga Shanghai, Berlin, and Austin/Tusla (TBD). I think that's extremely doable in 4 yrs and the Market will love it.

Further, in that timeframe I do expect the Tesla China Design Centre will bear fruit with a Model 1" World Car, and begin production at GF6/China which will ultimately build ~10M units per year. And the Market will know it

Cheers!

That's why I like you Lodger, I knew you'd have it figured out to a gnat's behind!

 

[mongo]

But isn't almost every fund part of a brokerage/bank or some other entity? So if they are convinced that Tesla will be included in x weeks/months can't they buy stock in some other account and then sell it to their index funds at the exact stock price Tesla has when included in the index? That way the funds would get the 'correct' price to start with and avoid the 'stampede' the week before.

Sure there is a risk that the stock could go down but any stock that looks to be included in an index should be more likely than not to beat the average stock market. And if it goes up that's profit they can keep to themselves instead of giving it to the fund.

I can't really see much negative for anyone doing it this way.

What are they going to buy TSLA with? They need to sell all of the soon to be demoted stock and some of every other stock to free up capital.

 

[wipster]

Will GF China be producing Tesla CyberTrucks before a foundation is poured in the Austin or Tulsa areas or any model product coming out of GF Berlin?

I'd put money on it... wait, I already did...

 

[wipster]

Personally, I’d like to see people get used to a comma in the TSLA share price for long enough that people unconsciously expect it to return not that that long after the split. So, I’d recommend waiting on the split till we’re comfortably at some point in the $2K to $3K+ range for a while.

Also, I’m more than happy with this latest rise in price and see good things on the horizon, so I question the need for it just now.

Finally, there is something a bit, I dunno, manipulative about splits sometimes and I’m not sure either Musk or Tesla want or would benefit from that look now.

At a guess, I’d be looking for a 10 to 20x split in about the earlyish 2022 +/- timeframe.

I'd bet on 20-1 in 2021. Regardless I'm glad it will probably be discussed at the shareholders meeting in September.

 

[wipster]

Will GF China be producing Tesla CyberTrucks before a foundation is poured in the Austin or Tulsa areas or any model product coming out of GF Berlin?

Also interesting that LG announced the supply of batteries for GF Shanghai around the same time the announcement of the sale of Cybertrucks in China came out. Things that make you go "hmmm..."

 

[EdKan]

I really like this post and it's not because it's so very bullish and that I see dollar signs in my eyes, it's because it reflects the reality of how the market actually behaves in such situations! To be 100% honest, I wish this were not how markets worked but no one person is powerful enough to change the culture that creates this situation.

Human nature is partly responsible for the "parabola effect" (greed, FOMO, the lemming effect) but my observation is that the Wall Street culture exploits this human weakness to effect maximum profit for those in on the game. And I have been seeing the signs of this transition within the industry for some time now. The publicly visible beginnings of this change began many weeks ago when the most well-known manipulator of them all, Jim Cramer, started recommending TSLA. The boys in the club will make billions of dollars in profit as they pimp Tesla to the hilt, encourage maximum greed, and make it climb for the sky to a dizzyingly high and previously unimaginable crescendo before collapsing back down to levels that can be easily justified by reality.

The very people who have been encouraging their minions to represent that Tesla has no future will now make Tesla out to be the golden goose, the savior of the world, the answer to all our woes, everything it really is and more. The future will be so bright you will need welder's goggles to look directly at it. The price of TSLA shares will rise to heights not even the most optimistic TSLA bull could have imagined as recently as last week (and higher than some TSLA bull will ever be able to imagine).

Of course the exact speed, duration and height of this move, not even the boys in the club know. This game is a dynamic one and it depends upon the response of the overall market to their dance. But the story is a good story (as we all know) so you can bet the boys will work it longer and take it higher than your instincts are likely to tell you. It will have sharp drops along the way that many will think MUST be the absolute top. These are absolutely necessary to keep the story alive and strengthen it for the next leg up. And the boys in the club like to profit as much as possible so they will keep the game going as long as possible. A successful virus does not kill it's host because then the game is over. A virus keeps it's host alive so it can continue to spread and become bigger and more successful and have maximum impact. The boys want to keep the game alive as long as they can make another buck and they will play it as long as they can keep the story alive. Because of TSLA's standing in the market, the end of this game with TSLA will coincide with the end of the current market bull run.

During the recent Coronavirus dip to the $350's the boys in the club took Tesla as low as they could. They will not be doing that on further corrections on the way to the top because it risks the market losing too much confidence in their subject. They want to establish doubt and initiate a sell off without destroying the bull run. You don't want to kill the goose that lays the golden eggs prematurely. The higher TSLA goes, the less it will take to establish a correction, they will start to happen naturally.

There are some caveats here. External factors, like loss of confidence in the market, could cause both games to end prematurely. It's important to realize this game is being played within the context of a larger game, the current bull market. The big game is being run by the same boys in the same club. TSLA is the smart kid that the boys in the club don't really like. So they will make him the hero of the bull market before they make him the goat. But even they do not know which game will end first and cause the other to end also. In their ideal world the larger game holds together long enough to take TSLA to extreme new heights as that makes them the most profit.

It's times like this I'm glad we have a leader like Elon. He can't stop the manipulators from doing what they do but hopefully he can use it to good effect in terms of accelerating the mission. Another thing to be aware of is that Musk doesn't like the boys in the club anymore than most of us do. But he is in a position to make their job more difficult. Which means anyone trying to emulate the boys in the club for profit could get hurt right along with them when Musk takes action to disrupt their game.

Great post!

I know that nobody is giving investment advice (or shouldn't be), but based on your beautifully detailed view of this world we find ourselves in, what is one to conclude? Close one's eyes and just HODL for years, or is there a better strategy? Every time I have tried a 'better strategy', like some others here, it hasn't worked out well!