Thanks for the comment.
As someone relatively new to institutional dimension of stock movements, I was looking forward for a sensible counterpoint to the conspiracy theory, in the spirit of a healthy discussion.
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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
- Start date
Thanks for the comment.
As someone relatively new to institutional dimension of stock movements, I was looking forward for a sensible counterpoint to the conspiracy theory, in the spirit of a healthy discussion.
mickificki
Member
I guess we have a few more notches to move up to be investment grade?
I heard a rumor that some Dutch guy cycled all around the Nederlands today tearing off Model 3 rear bumpers in order to get the stock price down so he could buy more shares.
Knightshade
Well-Known Member
I do not believe that is correct....
As of last Fridays close there'd be about 26 million shares REQUIRED to be bought by the index funds.
The 60-80 million share #s throw around are people misunderstanding the difference between indexed and benchmarked and assuming the benchmark funds (which are larger than the index funds) will ALSO have to buy in exact weight... (which if they did would be almost 40 million more shares- but again they're not required to buy ANY)
Now, they might still buy some-likely will buy some- but then likely they already HAVE some since their composition isn't based on the actual index-some of the recent runup in price might well be such funds getting ahead of the game...plus those who want to add it later can always wait till after the chaos dies down if they do want to buy since again- no requirement on them....
ARKK is actually a great example of an actively managed fund that BENCHMARKS against the S&P500 (generally beating it too)- but is not required to mirror it... and indeed they already have the tesla shares they want (and often sell them off as the price goes up since they don't want TSLA to be more than a certain % of the value of the fund.)
So if only the index funds buy at inclusion, and they're the only ones that HAVE TO- that removes about 18% of the existing float. And it'll certainly bump the price up.
But not near as much as pulling 50-60% of the float off the market would as I've seen some folks claim would happen- because that'd only be true if the benchmark funds ALSO had to buy at the same time- and they don't.
Headed in the right direction. Each notch upward would lower borrowing costs, and should bolster the share price.
Headed in the right direction. Each notch upward would lower borrowing costs, and should bolster the share price.
Curt, can you clarify for the uninitiated what it takes for Moody to consider Tesla investment grade, and how long it takes to climb the next 5 notches?
More importantly, does it involve sacrifice of goats at full-moon?
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woodisgood
Optimustic Pessimist
Would we not expect to see a glimmer of upward movement AH due to the Moody's upgrade?
I guess $8 billion just doesn't get you very far these days
This table from Troy gives an insight into what is probably happening at Fremont:-
https://twitter.com/TroyTeslike/status/1285960958498820102
Elon seems fairly positive about California in the earnings call so it is unlikely that the paint shop expansion (might be an additional rebuilt paintshop) has hit any issues.
Assuming there are no issues, the expansion seems to have been in the works for at least 6 months, so it may not be far away.
If the paintshop expansion does happen there is no urgent need to move some Model 3/Y production to Texas...
However if they can build a paintshop in Texas, moving the one or more tent based GAs, (GA4/GA4.5) to Texas makes some sense or they may just start with a new tent/building in Texas.
The only real reason to move/re-purpose a tent may be to make room for the Roadster...
https://twitter.com/TroyTeslike/status/1285960958498820102
Elon seems fairly positive about California in the earnings call so it is unlikely that the paint shop expansion (might be an additional rebuilt paintshop) has hit any issues.
Assuming there are no issues, the expansion seems to have been in the works for at least 6 months, so it may not be far away.
If the paintshop expansion does happen there is no urgent need to move some Model 3/Y production to Texas...
However if they can build a paintshop in Texas, moving the one or more tent based GAs, (GA4/GA4.5) to Texas makes some sense or they may just start with a new tent/building in Texas.
The only real reason to move/re-purpose a tent may be to make room for the Roadster...
Margin calls or anticipation of them may be taking place. Once past 20 minutes after the close, almost all of the trades appear to be for less than the number of shares I own. Many of them may involve sidelined sports bettors who've become newbie day-traders.
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smorgasbord
Active Member
Moody's upgrades Tesla's ratings including CFR to B2 and senior unsecured to B3; the outlook is stable.
Moody's upgrades Tesla's ratings including CFR to B2 and senior unsecured to B3; the outlook is stable.
Moody's is still years behind the reality of BEVs over hybrids. For instance, they actually said:
"Tesla does not compete in what will be the much larger hybrid electric vehicles [market], nor does Moody's anticipate that Tesla will develop products in that market."
Even the other legacy OEMs, except Toyota, admit that BEVs, not hybrids, are the future.
Moody's also underestimates Tesla's sales growth:
"[Moody's] anticipates Tesla's 2020 sales growth will be in the mid-to-high single-digits -- considerably outperforming the industry, but significantly lower than the company's historic pace."
Tesla delivered 367,500 vehicles in 2019, and we just heard them affirm they still think their goal of 500,000 is achievable. That would be 36% growth. Even if Tesla only delivers 450,000 vehicles, that's more than 22% growth. To only grow 9% (the high end of Moody's estimate), Tesla only needs to sell 400,575 vehicles. That appears to me to be a slam dunk.
And, of course, they can't resist disliking how Musk operates:
"However, important additional risks are posed by Tesla's governance structure. There is considerable latitude to the company's CEO, Elon Musk, with a board that has a mix of inside and outside directors. In addition, Mr. Musk's executive responsibilities with outside ventures such as SpaceX could tax his ability to adequately focus on Tesla's challenges..."
In other words, they're worried about the one thing that has made Tesla successful so far - Elon Musk.
Crazy stupid if you ask me.
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smorgasbord
Active Member
True. And there is another index to which TSLA might be added soon afterward: The Dow Jones industrial Average. It's oddly contained no automakers since the bankruptcy of General Motors in 2009 (unless we count bulldozer-maker Caterpillar).
Frankly, I wouldn't be surprised if by the time they add Tesla it's more of an Energy company than an Automaker, anyway.
Moody's - this afternoon: Moody's upgrades Tesla's ratings including CFR to B2 and senior unsecured to B3; the outlook is stable.
Germane Excerpt:
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook reflects Tesla's progress in establishing a more profitable and competitively sustainable position in the BEV market, balanced against the challenges of: a global economic slowdown due to the coronavirus; increasing competition in the BEV space from established OEMs; and the need to transition profitability away from the heavy dependence on the sale of regulatory credits and toward the sale of vehicles.
Tesla's rating could be upgraded if the company continues to make operational progress through the ramp-up of its Shanghai facility and new operation in Texas, continues a successful launch of the Model Y, and continues steady progress towards making the Tesla product lineup more affordable and profitable.
Metrics that would support an upgrade include: EBIT margin that can be sustained above 5%; debt/EBITDA approximating 4x; and EBITA/interest above 2x.
The ratings could be downgraded if, as occurred during 2018, the company begins to encounter operational problems managing its aggressive global manufacturing and product expansion. Metrics that would contribute to a downgrade include: EBITA margin being sustained below 4%; debt/EBITDA approaching 6x; and EBITA/interest below approximating 1.5x.
Volume is ridiculously low today. What gives?
This is a slap in the face. Really? Ford still has higher credit rating than Tesla! Ridiculous
adiggs
Well-Known Member
adiggs
Well-Known Member
True. And there is another index to which TSLA might be added soon afterward: The Dow Jones industrial Average. It's oddly contained no automakers since the bankruptcy of General Motors in 2009 (unless we count bulldozer-maker Caterpillar).
Being added to DJIA - that'd be wild.
And for those that don't like the high share price as it locks them out of smaller transactions that they could make, my understanding is that index is a share price weighted index, and that TSLA shares will need to be under $100 on inclusion. Sounds like a 20:1 split, give or take, to make that happen. That could be fun
From Dow Jones Industrial Average (DJIA) Definition
- The DJIA is a price-weighted index that tracks 30 large, publicly-owned companies trading on the New York Stock Exchange and the NASDAQ.
Even though I consider the DJIA to be irrelevant for actual investing, it carries a lot of social weight. I'd love to see TSLA added!
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