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

[jerry33]

Interesting. I used the interactive question/answer thingy and it said no dice. Should I just go straight to a person then?

I always used the Q&A thingy. But the rules may have changed since I last took out a loan.

 

[StealthP3D]

I'm sure I'm not the only one, but I will be selling my trading shares/options when it looks like we are close to the top and possibly some core shares after that to bet on a slow decline back to a reasonable price. (assuming we hit some weird/unreasonable prices)

In general, I wouldn't recommend that, and especially not in a taxable account.

The only exception for me would be if it becomes apparent that the share price has exceeded a sustainable price by such a large margin that it makes sense to sell. But I would caution on under-estimating what a sustainable price actually is. The sustainability of the share price will depend upon Tesla's execution going forward but the consequences of getting stopped out of the stock of a company executing perfectly is my worst investment nightmare. Because a company executing perfectly is the dream stock everyone wants to be in.

So when I set what price I think is sustainable I try to err on the side of a company running perfectly on all cylinders. Yes, we are all familiar with a well running ICE and that is very descriptive of the way a well running company functions even if they happen to make EV's. Because there are quarterly pulses but the overall execution should be smooth and powerful. Currently, I like @FrankSG estimation of "Barring bad macros, I think there's a decent chance TSLA will be permanently revalued to $2,000+, with a small chance of some crazy permanent revaluation to $3,000+" Granted, this backs out the likely short-term dips lower but those do not interest us. Because I agree with with this, I really don't want to be selling below $2500 and I would only do so at that price reluctantly and only under certain conditions.

I don't want to play any short-term dips because that requires two successful trades to make work. The easy one is the sell but even that is fraught with the risk that it will inexplicably keep soaring. Assuming you sell near the top and are still interested in profiting from Tesla's further growth and execution, then you also need to time a re-entry buy. And that is fraught with even more danger.

The bottom line is I don't recommend trading a stock with this much growth potential and proven ability to execute. You are generally better off to mimic the owner of a brokerage account who has died. In other words, do nothing!

 

[The Martian]

No they could not. And that was not their intent.
The Buying Entity had already made the decision before thursday to buy the shares on Friday for two reasons. The first was the fear of what they knew would get to other powerful buying groups before they could get all the stock they wanted/needed. And the second was to get the maximum assistance of the MM's to depress the SP while they bought in hyper mode. On Friday the MM's coordinate their effort to keep the SP at Max Pain, or as close as they can. And Friday is the only day that really matters so MM's are vigilant and focused Friday afternoon.
The Buyer figured out how much the SP would move if they purchased the number of stocks they needed on that Friday. They could have figured it out at anytime before the purchase on Thursday. But by NOT buying the calls till Thursday they gave the rest of us the least amount of time to consider what was going to happen. (I remember a few months back something similar happened. An even greater amount of money bought calls and it made even more money for the purchaser..anyone remember the exact event?)
The primary goal was to purchase a large quantity of shares before what they knew would be known by anyone else so they could just have to deal with the increase in price they were creating. They used the MM's desire to manipulate the price lower while they started buying. They knew the MM's couldn't keep the price down against the sheer volume they were going to buy so they knew the price was going to be at least $1500 by the end of the day. And they did the intelligent thing with that information, and they bought calls at $1500. The calls were just a side dish. Sure they made a helluva lot of money on them. But their move was to buy millions of shares before anyone else moved the price based on what they knew. And by doing so they will make many times more money than they made on the $1500 calls in the near future.

EDIT: The move could have even been done by a front runner who will re-sell the stock once inclusion to the S&P 500 is announced.
But like I have posted. This is too bold a move to be done without concrete proof .

Agreed. It's only logical that Thursday $550k option buyer is the same whale did the buying Friday. IMO, $550k option bought Thursday is not the gamble or collusion for one time quick profit as most of the people suspected. It's part of the share purchase plan executed Friday. If the raise from $1000 to $1400 is caused by someone accumulating shares quietly, Friday's action showed someone got impatient or feeling the time is running out. It will be exciting and roller coast time for next few weeks. I think what happened so far is just a prelude.

 

[Sancho]

Any comments on what seems to be a multi-million dollar wager on TSLA reaching $2,500 next week? Like yesterday's large bet on $1,500, seems like somebody knows something.

Is this as risky as it seems?

https://twitter.com/ValueAnalyst1/status/1281886141109751809?s=19

Risky is an understatement for a big bet on $2500 next week.

But regardless, it may help move the SP next week. Any call expiring next week is like a magnet: the closer the SP gets to it, the more the MMs who have sold those puppies are going to have to cover to protect themselves from their potential exposure.

It’s crazy big weekly option bets like this that help cause the big movements and the SP pins on Fridays. It may look like manipulation of the SP, but somebody has to sell the calls that investors want to buy, and some of those sellers don’t have a favorite horse in the race, they just don’t want to get slaughtered.

In the unlikely event the SP goes significantly past $2000 next week, then $2500 would be in play because of these bets.

 

[Causalien]

Hot hamit! Fidelity says IRS won't allow loans against IRA accounts! Guess I'll just have to sit tight and wait for the climb.

Get them to give you a mortgage

 

[StealthP3D]

If post-addition TSLA outperforms the rest of the S&P 500 by 10% (let's say for simplicity TSLA is up 10% and everyone else is flat), so at the next rebalancing an index fund requires 10% more dollars in TSLA, don't they buy nothing because their existing TSLA shares appreciated 10% already? What could happen to actually require them to buy more shares?

(I guess I'm thinking, if companies on the index issue more shares, that might change the mathematics? But not if the share count stays the same and it's only the share price that adjusts?)

OK. You're making my brain hurt! And I agree that previous discussions on this topic have been less than clear (and I haven't spent enough time trying to parse them).

I was thinking why would the index need to be re-balanced quarterly if it were self-balancing by design? But then you had to complicate it by introducing the issuance of more shares by those companies representing the index (which makes sense). So, like you, I'm still a bit unclear on these details.

 

[StealthP3D]

We hates bridges. When you're an Islander you will too. Ferries to the mainland, then the Pan American Tunnel.

The only way to go is hiring The Boring Company to make private tunnels. All the advantages of a public bridge with none of the disadvantages. Use facial recognition to gain access. Guests can enter a special one-use code.

 

[kanweg]

Masterplan part one was simple and clear. I’m eagerly awaiting model 2. A transition to a cleaner future (and coffers of money to go to Mars) require it. Solar cells and windturbines became affordable/competitive over time because of continuous development and mass production. Also, much has been said about the importance of software. But if we look where the kilos are, it is in the mechanical components. Cybertruck is revolutionary with its exoskeleton, that is apparently cheap to produce. Will we get a model 2 with an exoskeleton?

Model Y has fewer chassis components than Model 3. And the Berlin version of Model Y will have even fewer, according to Elon’s recent tweets, and a previous statement. Instead of making a large number of small components that have to be assembled, less assembly (and fewer workers) are necessary if you can cast large body parts. According to Munroe the Model Y is cheaper to make than the Model 3, despite being a larger car. Being demand constrained, Tesla can afford to set its margin very comfortably. Not good for reaching the goal If you want a BEV in everybody’s hands, but if you are production constrained it is, because it builds your financial position to do the research and development that can lead to further cost improvements.

Model Y is the trainer for Model 2. Figuring how to produce a car more cheaply.
GF Shanghai and GF Berlin are trainers for how to build a factory cheaply. Once this is mastered, Model 2 factories can be built by the numbers.

As to the rise of the SP last Friday, could it have to do with battery day? If Elon goes into mining/securing supply on a never seen before level, it would be better to have some stock before word gets out.

(I pondered using some more margin Friday morning to buy some more chairs. I didn’t want to risk having more debt. Yes, I regret that. If I had bought 10 I could have had a free share at the end of the day. Oh well).

 

[Krugerrand]

Thank you. This makes me feel a tiny bit less crazy because it's exactly how I feel and I'm glad I'm not the only one.

Side note: getting another Tesla, thanks to TSLA. By 2022 we should be on our fourth. Hope the ones we sell go to good homes and last forever.

Oh, we’re crazy. Bat poo crazy because we’ve waxed up our surfboards and are riding this tsunami all the way inland.

Warming up:

 

[TheTalkingMule]

Risky is an understatement for a big bet on $2500 next week.

But regardless, it may help move the SP next week. Any call expiring next week is like a magnet: the closer the SP gets to it, the more the MMs who have sold those puppies are going to have to cover to protect themselves from their potential exposure.

It’s crazy big weekly option bets like this that help cause the big movements and the SP pins on Fridays. It may look like manipulation of the SP, but somebody has to sell the calls that investors want to buy, and some of those sellers don’t have a favorite horse in the race, they just don’t want to get slaughtered.

I was thinking about this Friday when someone mentioned the $1500 call bet.

At what point is it advantageous for a large shareholder to just drop $2-3M on near term calls unlikely to be ITM? Is that a big enough bet to tip max pain higher? I feel like options market making drives this stock's SP so much, at some level it must become possible to pump your shares enough to more than cover any losses from moving max pain with huge options buys.

 

[⚡️ELECTROMAN⚡️]

Oh, we’re crazy. Bat poo crazy because we’ve waxed up our surfboards and are riding this tsunami all the way inland.

Warming up:

View attachment 563403

Looks like a half Abyssinian half Bengal. Didn’t know they could surf.

 

[astrotoy]

My understanding is the long term trend is that the volume of index funds have been growing at the expense of purchases of individual stocks or actively managed funds. With much lower operating costs, index funds have a built in advantage to actively managed funds. Many actively managed funds have thrown in the towel in trying to compete with index funds and have become quasi-index funds so they stay close to tracking the performance of the index funds, hoping that they will not lose customers. The growth in index funds (many either tied directly to the SP500 or having the SP500 stocks as a major component of their portfolio), as well as the quasi-index funds, means to me that with TSLA as one of the components of the SP500 means continued long term demand on the stock as the share of the total investment pool continues to move into index and quasi-index funds. In addition, once TSLA is in their portfolios those shares will be taken off the market, since index funds have essentially no flexibility in portfolio management unless forced to sell stocks if there are significant net redemptions.

 

[smorgasbord]

In general, I wouldn't recommend that, and especially not in a taxable account.

The only exception for me would be if it becomes apparent that the share price has exceeded a sustainable price by such a large margin that it makes sense to sell. But I would caution on under-estimating what a sustainable price actually is. The sustainability of the share price will depend upon Tesla's execution going forward but the consequences of getting stopped out of the stock of a company executing perfectly is my worst investment nightmare. Because a company executing perfectly is the dream stock everyone wants to be in.

So when I set what price I think is sustainable I try to err on the side of a company running perfectly on all cylinders. Yes, we are all familiar with a well running ICE and that is very descriptive of the way a well running company functions even if they happen to make EV's. Because there are quarterly pulses but the overall execution should be smooth and powerful. Currently, I like @FrankSG estimation of "Barring bad macros, I think there's a decent chance TSLA will be permanently revalued to $2,000+, with a small chance of some crazy permanent revaluation to $3,000+" Granted, this backs out the likely short-term dips lower but those do not interest us. Because I agree with with this, I really don't want to be selling below $2500 and I would only do so at that price reluctantly and only under certain conditions.

I don't want to play any short-term dips because that requires two successful trades to make work. The easy one is the sell but even that is fraught with the risk that it will inexplicably keep soaring. Assuming you sell near the top and are still interested in profiting from Tesla's further growth and execution, then you also need to time a re-entry buy. And that is fraught with even more danger.

The bottom line is I don't recommend trading a stock with this much growth potential and proven ability to execute. You are generally better off to mimic the owner of a brokerage account who has died. In other words, do nothing!

Tesla is not trading on fundamentals. 90K+ cars a quarter, a small GAAP profit in Q2, expansion plans underway, etc. do not alone justify this move.

Even if you consider that TSLA has been a wound spring, consolidating for the past half decade, that doesn't make $1500 a justifiable level. And I'm not just looking backwards at VW or Toyota, I'm looking forward a few years with more vehicle sales, FSD achieved, more energy storage, and more solar.

The only "fundamental" you could apply is that Tesla will achieve L5 and thus enable the Tesla Network of self-driving robo-taxis, creating huge demand for a personal vehicle that literally pays for itself and then some. That's a risky bet for most.

It seems clear, to me anyway, that the rise in TSLA share price is mostly fueled by an almost certain S&P 500 inclusion, and the anticipatory positioning being done now. Which, I think will step up on upcoming events: Earnings Call/Shareholder meeting followed by Battery Day, and then followed by an official announcement from the S&P Index Committee.

I plan on selling all my TSLA in tax-advantaged accounts between the day of announcement and day before it's effective. I may sell most/all of my very long term (since 2011) holdings in my taxable account, too, depending on how big the pop is.

I do believe that, unless the Committee makes rules changes, no matter how high TSLA is on the day of the announcement, it will rise afterward as index funds are compelled to buy. It is possible, however, that everyone that is today stocking up to sell when I plan to sell will also sell, and thus prevent a further ginormous pop, even as $46 Billion of TSLA are traded in those 5-10 days. But, that's still my current plan, subject to change of course.

 

[Krugerrand]

Looks like a half Abyssinian half Bengal. Didn’t know they could surf.

Bengal apparently.

 

[⚡️ELECTROMAN⚡️]

Confession time...

It's either write this post or perch myself on the window ledge. (Ground floor. Not much good there.) This is the only audience to whom I can bare my tortured soul.

Some years ago, I bought a bunch of TSLA at $200. (I'm not savvy enough to trade options. I'm more comfortable buying and holding long-term when I believe in the strength and vision of a company.)

Through it all I held fast and didn't sell. When TSLA went down to $150 and cries of 'bankrupt' were coming from every talking head on Wall Street, I just smiled and sat tight. I watched the reversal and held on, all smiles, until the pandemic hit. Until it was apparent that the pandemic was going to have a significant impact on the world and the Tesla factory closed.

At that point, I made the dumbest financial mistake of my life to date: I sold all my TSLA at around $750. Not because of any reduction in faith. I was trying to be clever. "There's going to be a dip back to $500-ish range due to the results of the plant closing and the general economic impact," my idiotic brain told myself. "I'll buy back in at that point and have even more shares."

And the downturn never happened.

My wife steadfastly shared my long-term faith in Tesla (which is still unwavering) but she, too, believed that the world's most volatile stock would dip and give us a chance to get back in. So we waited for a dip. And opportunity after opportunity passed us by as we waited for a dip that never happened.

So here we sit. Still sitting on cash that while missing every opportunity to reinvest in TSLA.

I'm absolutely tortured at the horrible decision I made by trying to be clever. My wife is far more zen about it. We locked in profit and she does a better job of focusing on that.

And, though it all, I can't stop beating myself up for exiting at $750. I'm so anguished over this that I can't let it go. I told my wife "I want to punch myself in the face until I'm unconscious, wake up, and do it again."

This is the only place who would possibly understand my pain. All of my friends and family would hear this and say "Oh, you didn't make enough on your TSLA stock and you're sad now. Boo hoo. Piss off."

So now we're faced with a decision: I want to just get back in now at market price and forget about the mistakes of the past and she wants to wait for a dip that may never happen before getting back in.

My belief is that long-term we're looking at $2500 - $3500 in the next three to five years and just jumping back in now is the best thing to do. Trying to be clever is what got us into this mess in the first place and I don't want to make that mistake again. My wife still believes that the world's most volatile stock won't disappoint and we'll see a dip again. Certainly not down to where we exited, but possibly nearer to $1000 or a tad lower.

That's my pain and our current struggle.

Thanks for listening.

Misery loves company. I’ve been watching the stock price in terror for the last few months. I’m going through a divorce and have to split all of the increases with my wife. It’s really ruined the whole owning of the stock for me. It’s not so much the thought of having to share it as it is I’ll be left holding the bag if the TSLA bubble bursts after the settlement.

 

[floydboy]

Would like to retire the 15 yo Sante Fe at the end of this year and reward Tesla(and ourselves) with the purchase of a new Model Y(and some solar panels). Retirement wasn't looking so keen before, with both of us barely clearing 85k after 20 yrs in our respective 401ks. We decided to take the plunge and cleaned out the glacial 401ks and bet it all on Tesla. Liked Musk, the mission and the honesty with which he looked at problems. Risky, but if you're going to take a risk, may as well be for something you believe in. Besides there was a plan B, pensions and social security. Well, our meager 225 shares are looking PRETTY good right now at over 450% in just a year and a half.

Don't want to part with a single share, but it sure would be nice to treat ourselves for being so damned smart!

 

[floydboy]

Get them to give you a mortgage

Even with Chase riding a second mortgage on us?

 

[Artful Dodger]

Pretty sure you are right about about that.

The good thing about the S&P 500 quarterly rebalancing is that I expect Tesla to, on average, outperform the S&P 500 by a wide margin. What this means is every quarter this is true, all the S&P 500 index funds will act like large sponges to absorb more Tesla shares into their funds. And funds that are benchmarked to the index will likely add as well.

A subtle effect, for sure. But an effect that can only be beneficial over time.

Precisely what I'm thinking. And with steadily increasing weights for TSLA in the S&P 500 comes steady buying from index Funds, and a steady contraction of the float. It's a virtuous cycle that'll play out for 5-10 years until, IMHO we see TSLA as the #1 ranked equity on the S&P 500.

Imma make the call again: TSLA will be #1 on the S&P 500 by March 2025 . That's if Tesla executes on its current plans for GF3China/GF4Berlin/GF5Texas. Other progress will be just a bonus (TEnergy, TNetwork, TAero, TMedical, Teslaquila...)

Cheers!

 

[EnergyMax]

Looks like lower costs for Model Y are going to increased production. It's now $3k more than (previously $6k) the 3.

Model Y LR AWD now starts at 49,990 : teslamotors

 

[Mike Smith]

Tesla is not trading on fundamentals. 90K+ cars a quarter, a small GAAP profit in Q2, expansion plans underway, etc. do not alone justify this move.

Even if you consider that TSLA has been a wound spring, consolidating for the past half decade, that doesn't make $1500 a justifiable level. And I'm not just looking backwards at VW or Toyota, I'm looking forward a few years with more vehicle sales, FSD achieved, more energy storage, and more solar.

The only "fundamental" you could apply is that Tesla will achieve L5 and thus enable the Tesla Network of self-driving robo-taxis, creating huge demand for a personal vehicle that literally pays for itself and then some. That's a risky bet for most.

It seems clear, to me anyway, that the rise in TSLA share price is mostly fueled by an almost certain S&P 500 inclusion, and the anticipatory positioning being done now. Which, I think will step up on upcoming events: Earnings Call/Shareholder meeting followed by Battery Day, and then followed by an official announcement from the S&P Index Committee.

I plan on selling all my TSLA in tax-advantaged accounts between the day of announcement and day before it's effective. I may sell most/all of my very long term (since 2011) holdings in my taxable account, too, depending on how big the pop is.

I do believe that, unless the Committee makes rules changes, no matter how high TSLA is on the day of the announcement, it will rise afterward as index funds are compelled to buy. It is possible, however, that everyone that is today stocking up to sell when I plan to sell will also sell, and thus prevent a further ginormous pop, even as $46 Billion of TSLA are traded in those 5-10 days. But, that's still my current plan, subject to change of course.

Tesla is poised to grow 40-50% per year for the next decade at least while maintaining around 25% margins so the fundamentals do justify this price and more.