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

[ADP]

https://twitter.com/wholemarsblog/status/1295862767551840256?s=21

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Can’t find original source yet.

https://twitter.com/wholemarsblog/status/1295862767551840256?s=21

View attachment 577992

Can’t find original source yet.

 

[Mo City]

I think it is more accurate to say there is no pain free way to get to where Tesla is.

No way of matching Tesla's level of innovation, that doesn't require a lot of great engineering talent.

No way of scaling EV production volumes quickly without the batteries, and no batteries without a lot of planning an commitment.

But if the aim is simply to make EVs that are better than an ICE for around the same money, the Chinese are close and Tesla is close, everyone else who survives will eventually get here...

My guess of future world wide production volumes is something like:-

• Tesla 20%
• China 30%
• Germany 20%
• Korea 15%
• Japan 7%
• Everyone else 8%

Of course the guess could be very wrong. but if they survive I have GM+Ford at around 3-4% at that size, they may as well merge..

I don't think anyone can make a compelling argument why Tesla and China will not get to the numbers I list, they may go higher. In particular, China could be way more dominant.

One group of athletes have been training hard, watching their diet, and improving their technique, Tesla and China. The rest have spent a lot of time lounging around watching TV.

Agree with you on Tesla and China leading the way. The success of Chinese OEMs outside of China will be interesting to watch.

I know this is unpopular to say here, but GM and Ford aren't going away. The U.S. government won't let them fail. IMO, Tesla will become dominant in the U.S. followed by GM and Ford. Maybe GM and Ford merge.

It's popular here to root against and hate on GM and Ford but they simply aren't going away, nor should they. I love Tesla as much as anyone but a little brother (or two) at home wouldn't be so bad.

 

[astrotoy]

Thank you for the heads up. Tesla does take that into account with their pricing. Due to the $5k NY discount and the local utility discount it does make it still cheaper for me to get more solar with the Powerwalls. My only hope is that when I go for it after battery day they'll be able to get it installed before the end of the year.


View attachment 578024View attachment 578028

I ordered my Powerwalls from Tesla in April and they contacted me in May telling me that they were so backed up that they could not guarantee that my installation would be done by the end of the year, which was necessary to get the tax credit. They gave me the name of a local contractor who was a Tesla Powerwall dealer and the contractor was able to almost immediately get started - so we should have our installation done in September, well before the end of the year, assuming the permitting process goes as normal.

 

[StealthP3D]

Balanced article on Tesla shorts. Didn't see anything new, but a nice summary nevertheless. ‘The Longest Unprofitable Short I’ve Ever Seen.’

I'm nominating this for the funniest post of the month. For calling an article full of Spiegel and Chanos quotes a "balanced article". LOL!

 

[FrankSG]

I think it is more accurate to say there is no pain free way to get to where Tesla is.

No way of matching Tesla's level of innovation, that doesn't require a lot of great engineering talent.

No way of scaling EV production volumes quickly without the batteries, and no batteries without a lot of planning and commitment.

But if the aim is simply to make EVs that are better than an ICE for around the same money, the Chinese are close and Tesla is close, everyone else who survives will eventually get here...

My guess of future world wide production volumes is something like:-

• Tesla 20%
• China 30%
• Germany 20%
• Korea 15%
• Japan 7%
• Everyone else 8%

Of course the guess could be very wrong. but if they survive I have GM+Ford at around 3-4% at that size, they may as well merge..

I don't think anyone can make a compelling argument why Tesla and China will not get to the numbers I list, they may go higher. In particular, China could be way more dominant.

One group of athletes have been training hard, watching their diet, and improving their technique, Tesla and China. The rest have spent a lot of time lounging around watching TV.

20% market share for Tesla of the 2030 EV market would be pretty much my bear case at this point. I think double that is much more likely, with a decent possibility of a majority 50%+ market share.

 

[Prunesquallor]

...Tesla is about to go "commando" on the entire industry and it will be brutal.

No shorts?

 

[StealthP3D]

If he shorted 10 more shares, does that really count as "shorted more"?

Hey, when someone doubles their previous short position, I would say it's a big deal. Well, ...at least for them.

 

[Curt Renz]

Hey, when someone doubles their previous short position, I would say it's a big deal. Well, ...at least for them.

Ah, good old Martingale Betting. As long as one has infinite resources, one can't lose.

Martingale (betting system) - Wikipedia

 

[vikings123]

I continue to believe run-ups like this are mostly due to delta hedging requirements. A small boost to sentiment like strong Q4'19 ER, expectations of and announcement of strong Q2 P&D, and now a stock split, all resulted in a moderate amount of buying pressure, and the reason they led to monster run-ups were in my opinion delta hedging.

This table, brought to us by @generalenthu, calculates the # of shares market makers need to own to be delta neutral, if they have the short side of all options open interest and delta hedge 100%. Of course they will be long some of the options, which can be used to offset other short option positions, but this # nonetheless gives a good indication of the trend of the size of the market makers' options delta hedging shares inventory.

View attachment 578002

This is just a snapshot of how it's changed since the stock split announcement. You can see that at market close before the announcement, the # was at 29.5M shares, and that today it stands at ~53M shares, meaning market makers have collectively added at least millions of shares, quite possible 10M+ shares over the past 5 trading days.

I have yet to hear of even an unproven theory that could explain why naked shorts have to cover in the face of the upcoming stock split. And saying that this squeeze is evidence of it is like saying Antarctica melting is evidence of penguins radiating a lot of heat, and like seeing a bunch of puddles in your garden and saying it is evidence that a bunch of elephants came by and pissed all over it. These are possible explanations for what you're seeing, but there are many more possible explanations that are much more plausible.

I love these discussions because we are attempting to dig deep into the market mechanics instead of just saying something like S&P news probably got leaked etc.

I don’t know if the naked shorts have to cover because of the split. What we know is that they are required to get neutral at some point. I guess it is possible that MMs were not fully delta hedged and were forced to buy up shares(similar to what happened in Feb). All of this leads me to think that MMs did not learn from previous mistakes and have continually abused the naked short selling privileges to game the lucrative options market. It is only when momentum is too much to handle is when they play by the rules.

Where can I find the data that you posted above? Is that a data feed that is accessible online? I’d love to see what the delta hedging requirements were historically for the past 8 months.

For longs all of this should not matter as the SP will eventually find its right place. Very fascinating stuff. Thanks for engaging me.

edit: Just realized you posted a hyperlink to the data, please ignore the last part.

 

[mrmage]

20% market share for Tesla of the 2030 EV market would be pretty much my bear case at this point. I think double that is much more likely, with a decent possibility of a majority 50%+ market share.

Concur. Tech, especially software, forms natural monopolies that have historically been winner-take-all. Besides the EV itself, Tesla is ahead in complementary technologies including automation, charging network, V2G, and arguably FSD. If they can maintain leadership in just one or two of these, it's easy to see Tesla dominating the market.

 

[FrankSG]

I love these discussions because we are attempting to dig deep into the market mechanics instead of just saying something like S&P news probably got leaked etc.

I don’t know if the naked shorts have to cover because of the split. What we know is that they are required to get neutral at some point. I guess it is possible that MMs were not fully delta hedged and were forced to buy up shares(similar to what happened in Feb). All of this leads me to think that MMs did not learn from previous mistakes and have continually abused the naked short selling privileges to game the lucrative options market. It is only when momentum is too much to handle is when they play by the rules.

Although there's no hard evidence to back this up, this seems to me exactly what is going on. It seems like in low volume weeks with relatively little upwards pressure, it might be more profitable for market makers to use their huge inventory of shares to keep the stock price manipulated below certain numbers. It could be that during those weeks it is more profitable for them to keep those options out of the money than to properly delta hedge 100%.

Then when buying pressure becomes too much, and the risk they are undertaking by owning less shares than they need to to be delta neutral becomes too high, perhaps they decide it's time to go back to being delta neutral and pay off a bunch of call buyers in the process. Then the stock price eventually settles at a new high where enough buyers show up allowing market makers to go delta neutral again, so they can repeat the process all over.

This is just a theory though, but I find it a lot more plausible than the "naked shorts are forced to cover by the stock split" theory, because I can't think of any way in which the stock split would cause naked shorts to have to cover, and this theory doesn't just explain the run-up from $1,400 to $1,900 over the past 5 days, it also explains previous run-ups from $900 to $1,500 and $550 to $900.

P.S. I wouldn't be surprised if Baillie Gifford is selling off some TSLA at these new ATHs such as $1,500 and now $1,900. 10% of their entire portfolio was TSLA at the end of Q2 at a stock price of $1,000. If they haven't sold anything by now, TSLA would be approaching 20% of all of Baillie's assets at this point in time.

Where can I find the data that you posted above? Is that a data feed that is accessible online? I’d love to see what the delta hedging requirements were historically for the past 8 months.

For longs all of this should not matter as the SP will eventually find its right place. Very fascinating stuff. Thanks for engaging me.

https://tsla-oi.s3.amazonaws.com/index.html

@generalenthu created this, and it goes back to February 11th.

 

[MC3OZ]

Agree with you on Tesla and China leading the way. The success of Chinese OEMs outside of China will be interesting to watch.

I know this is unpopular to say here, but GM and Ford aren't going away. The U.S. government won't let them fail. IMO, Tesla will become dominant in the U.S. followed by GM and Ford. Maybe GM and Ford merge.

It's popular here to root against and hate on GM and Ford but they simply aren't going away, nor should they. I love Tesla as much as anyone but a little brother (or two) at home wouldn't be so bad.

I can see 2 issues for GM and Ford...

1) Customer Brand Loyalty/value for Money - when Chinese EVs are just as good for less money, and Tesla EVs are better for the same money, will customers still buy GM/Ford?

2) Where will they get the batteries?

When push comes to shove on EVs Chinese battery makers will favor Chinese EVs makers etc, basically having battery factories in you home country locally owned is an advantage. Lots of European battery factories are being built... Tesla will be making their own batteries.

GM and Ford can always do something about batteries... but they need to get moving on that.

 

[Knightshade]

How do we know he ever really shorted anything? I keep hearing he "says he shorted" and we always believe every word without question, but is there any proof?

His hedge funds incredibly embarrassing rate of losses as Tesla has gone up certainly support his claims he shorts them.

(and why would he so loudly and consistently be pushing mountains of FUD nonsense if he wasn't?)

I've only done a quick scan but I don't think this has been posted:-

https://twitter.com/p_ferragu/status/1295804869119533056

Most of the comments are pretty dubious about him being correct- pointing out the die size given the other info would be 10x larger than HW3.

Which seems the opposite of:

HW4 - is smaller-cheaper-faster-better

A process shrink and the die gets 10x larger? That doesn't make much sense in general (assuming they're not finding they need a TON more power to actually reach FSD which seems unlikely) and none at all in context of smaller or cheaper.

 

[StealthP3D]

My grandma still sends me $20 on my birthday. I stopped cashing those checks decades ago.

Dude! You should open up a Robinhood account in her name and start buying fractional TSLA shares with those checks in case she runs into financial hardship in her old age!

 

[RobStark]

Tesla faced bankruptcy 3 times and this is with zero EV competition and his cultish fans gave Tesla a lot of good will.

And the new companies don't have to overcome the biggest hurdle of all; the idea in the minds of consumers that an EV can not replace an ICEv.

Tesla already settled that question.

Plus, Tesla built the Supercharger Network because no one else was willing to build a fast charging DC network.

Today there is an ever growing CCS network in North America/Europe and GB/T in China. Every new company doesn't have to build their own network.

 

[MC3OZ]

His hedge funds incredibly embarrassing rate of losses as Tesla has gone up certainly support his claims he shorts them.

(and why would he so loudly and consistently be pushing mountains of FUD nonsense if he wasn't?)




Most of the comments are pretty dubious about him being correct- pointing out the die size given the other info would be 10x larger than HW3.

Which seems the opposite of:




A process shrink and the die gets 10x larger? That doesn't make much sense in general (assuming they're not finding they need a TON more power to actually reach FSD which seems unlikely) and none at all in context of smaller or cheaper.

Basically this has already been addressed by a well informed poster on this forum:- Tesla, TSLA & the Investment World: the 2019-2020 Investors' Roundtable

I was trying to say this earlier, you said it much more clearly. Basically a full motherboard chipset on a chip. They can improve performance and reduce power and cost. For dojo chips operating as part of a large parallel processor, this design would also seem to be much more effective.

But people seem to be confusing HW4 with Dojo... we don\'t know if Tesla is even designing custom chips for Dojo.

if you imagine that Tesla would somehow use the latest technology to design and build something worse than their current product,, you need to re-read this entire thread from the start.

 

[RobStark]

Agree with you on Tesla and China leading the way. The success of Chinese OEMs outside of China will be interesting to watch.

I know this is unpopular to say here, but GM and Ford aren't going away. The U.S. government won't let them fail. IMO, Tesla will become dominant in the U.S. followed by GM and Ford. Maybe GM and Ford merge.

It's popular here to root against and hate on GM and Ford but they simply aren't going away, nor should they. I love Tesla as much as anyone but a little brother (or two) at home wouldn't be so bad.

There is no desire in either major Party to bailout Detroit. Again.

It is more likely that VW buys Ford than GM and Ford merge.

The Feds would only let them merge after their is no antitrust concerns regarding full size truck and SUV market.

If it gets to the point where there is no antitrust concerns then Ford and GM are already finished.

 

[dw4ngg]

So, you capped your upside at 84% above today's price and you got paid 15% pre-tax on that risk for a year and a half. Your risk yields about 5% post-tax if you annualize it.
While I am sure seeing 300k hitting your checking account is nice, premiums on LEAPs are taxed as short-term income - 50% for you, I presume. So, unless you can offset short-term losses, I am not sure 150k post-tax is worth it given the current sentiment around the stock and upcoming events.

I'd close those calls. Advise.

Make the MMs hedge those calls.....

 

[RobStark]

20% market share for Tesla of the 2030 EV market would be pretty much my bear case at this point. I think double that is much more likely, with a decent possibility of a majority 50%+ market share.

Neither the EU nor the Chinese government will allow this.

 

[FrankSG]

Neither the EU nor the Chinese government will allow this.

Why not? And how would they do that?