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

[neroden]

Question: I'm thinking about rolling - and deleveraging somewhat - starting tomorrow (assuming that there's confirmation of payment of the bonds). In the process some of my call profits (barring some near-term disaster that eliminates them - don't want to jinx myself!) will get turned into stock. I was thinking about doing this through put selling - which I've never done before on Interactive Brokers.

While I understand "how puts work", what I don't have experience is how it plays out in practice. For anyone on IB, when someone executes a put on you... what exactly happens? E.g. I assume there's some sort of notification given?

I'm not on IB -- Schwab actually *phones* you when a put executes early. Happened to me a few weeks ago, my March $400 short puts had no time value and were assigned. (I was expecting it, but I wasn't expecting it that early.) If I remember correctly, I sold some T-bills (which have T+1 settlement) to cover it.

Does the system expect the transaction to occur instantaneously,

Yes, it does.... though you should understand the trade date vs. settlement date thing. You have to pay up for the stock you're buying on the usual stock settlement cycle (T+2, two days after purchase), which is to say two business days after the put is assigned to you, the cash (or margin) has to be present in the account.

or am I given time to settle it and decide what to convert to cash? I'm just trying to figure out how much cash / margin balance I'll need to maintain in IB if I decide to go this route.

 

[JRP3]

Is this post a joke?

Yes.

 

[Unpilot]

I'm not on IB -- Schwab actually *phones* you when a put executes early. Happened to me a few weeks ago, my March $400 short puts had no time value and were assigned. (I was expecting it, but I wasn't expecting it that early.) If I remember correctly, I sold some T-bills (which have T+1 settlement) to cover it.


Yes, it does.... though you should understand the trade date vs. settlement date thing. You have to pay up for the stock you're buying on the usual stock settlement cycle (T+2, two days after purchase), which is to say two business days after the put is assigned to you, the cash (or margin) has to be present in the account.

Hey Neroden welcome back I missed you around here.

 

[neroden]

No form 4 filed since early December. (Once he is officially replaced as Tesla's top accounting/financial executive I do not think he has any further obligation under Section 16 to disclose transactions in Tesla's securities.)

The December form 4 showed 38,789 shares owned outright and 23,997 zero cost RSUs.
http://ir.teslamotors.com/static-files/bb52d07e-1c95-47b8-ae20-8ef117a28d04

An October form 4 showed he owned 2,000 vested ISOs.
http://ir.teslamotors.com/static-files/d6b63ef3-86f5-4513-b843-1e51e81d7f03

He might also have some NQSOs and a minor amount in ESPP shares.

*Sigh* He has more shares than me. Well, I guess he deserves them. ;-)

 

[RobStark]

Much of opex is SG&A, a big chunk of that is Tesla Store related overhead. That will be significantly decreased and resources moved over into Service Centers (and I really hope the Tesla Store employees too).

Elon did say high foot traffic stores would remain as galleries. I guess that means popular malls.

 

[Cosmacelf]

I also want to add that I’ve heard Roadster 2 will come to market before mid or end of summer next year. Has anyone heard anything about this?

No I haven’t. Can you tell us more of where you heard this?

 

[Curt Renz]

This does bring up a good point. How do people purchase inventory models if there are no local sales people and no local inventory?

A couple of months ago a local sales agent told me that if it they are not currently storing what one wants at a lot in Chicagoland, they will truck it here from elsewhere. I imagine that if you order online, the computer can find your desired car in inventory near a local service center, or have it shipped there if necessary. Again the computers are taking over. First Bezos then Musk have come to understand this about selling and delivering products. Elon rang the alarm extra loudly today.

 

[neroden]

The simple problem is the very nature of fission. Whatever method you use. Fission creates every isotope on the table lighter than your fissile material (and indirectly, some heavier ones). Most of these are exceedingly toxic, in vanishingly small quantities. But you're simultaneously creating new byproducts with every chemical property in existence in your fuel rods - solids, liquids, gases, things that readily convert between different states, things that corrode various other things (whatever you make your reactor out of, you're also generating its worst enemy), etc. On top of that you're simultaneously bombarding your reactor (solid structures and working fluids) with an intense neutron flux, which is first off changing what it's made out of, via neutron capture, and secondly altering its crystal structure, which not only can severely harm its material properties, but can also store energy inside of it which can be released suddenly (Wigner energy), depending on the material. And you can't just use whatever materials you want to make it, because you also have to take into account how they're going to affect fission inside the reactor.

Let me reinforce what Karen said, because this isn't written very often, and I figured it out independently. (Karen's only the second person I know who's stated it clearly.)

The fundamental economic problems with fission power all derive from this phenomenon: you're creating a soup of mixed chemicals, and it destroys nearly everything you try to use to contain it. This obviously leads to endless cost blowouts. The only way to avoid the cost blowouts is to just not worry about it, and let the reactor self-destruct and leak -- which was basically done during the Manhattan Project and the Russian equivalent -- but that obviously has its own problems (Chernobyl, poisoning everyone in sight, etc.), as well as being rather uneconomical due to the short lifespan.

Nuclear power has also undergone something extremely rare in industry: a negative learning curve. That is, the more you deploy the tech, the more expensive it gets. In the case of nuclear, it's due to the process of learning all of the things that you didn't forsee that start to affect your reactor with time, and new hazards or costs that you didn't expect previously.

Which, in turn, is due to the problem of transmutation, which is an insoluble problem of fission.

In most of industry, we go to massive time, trouble, and effort to purify chemicals and to remove toxic elements. A fission reactor inherently does the exact opposite: it un-purifies chemicals and adds toxic elements. Perhaps you can see why it can never, ever be economical.

 

[mongo]

Tesla Direct Sales Map (US)

This is the Map maintained by TMC Staff.

Has something changed since Aug 19,2018.

Or is Tesla just servicing cars until they get arrested?

Owning a Tesla in Michigan

Tesla can't own a repair facility, but mobile techs aren't repair facilities.
Things they can't do:

(p) Authorize a motor vehicle service and repair facility to perform motor vehicle warranty repairs and recall work, unless the work meets any of the following:

(q) Own a motor vehicle service and repair facility, except that a manufacturer may own a service and repair facility for the repair of manufacturer-owned vehicles.

 

[tinm]

They do in Michigan. I think the most anti-tesla state. Michigan doesn’t allow sales or service centers due to the law strengthened and enforced by republicans (you know, the free market party).

On the contrary, New Mexico is the most anti-Tesla state.

Source: me.

 

[jerry33]

Sorry if I misunderstood, but I'm of the old school for which manual referred to a method of gear changing within the transmission.

I always referred to that as a standard transmission.

 

[Fact Checking]

Honestly, this seems to me like a stunt done by some very rich person or company who bought a Model X and set it on fire (in what they thought was a "safe" location). Can't imagine why, but people have done stranger things. K Foundation Burn a Million Quid - Wikipedia

No, I really think they hit some obstacle frozen into the lake, or a rock sticking out near the shore. Very few ice lakes are completely smooth and it's easy to get carried away ice drifting.

 

[mongo]

Honestly, this seems to me like a stunt done by some very rich person or company who bought a Model X and set it on fire (in what they thought was a "safe" location). Can't imagine why, but people have done stranger things. K Foundation Burn a Million Quid - Wikipedia

It hit a rock frozen to the ground.

from Popular Mechanics: "The Shelburne Police Department tells Popular Mechanics that the owner of the vehicle took their Tesla onto the ice to go fishing, and that at some point during the expedition the car hit a rock. The car started making unusual noises, and shortly after that caught fire. No one was hurt."
Tesla Model X Burned Up on Vermont's Lake Champlain

 

[Curt Renz]

I’m not worried about regular people returning their slightly used Model 3s but I am worried about fraudsters doing this. Hopefully Tesla has a good anti fraud program in place...

Tesla earlier had a 3-day return policy. They may have learned that returns are minimal, and may have developed means for detecting most frauds.

 

[sundaymorning]

I agree. Elon is ruthlessly attacking the dealership model from a different angle. It might cost less to bankrupt them going full Amazon rather than litigate to change laws.

With this move I think Tesla is also going on the offense when factoring all the chatter of a “Tesla Killer” coming in 2019, 2020 or 2021. What will the consumer think when staring at a $45k price tag on an Audi vs. 37k Model 3?

Tesla is now attacking any “Tesla killer” chatter before anyone of them hits the market. There’s a term for this when dealing with livestock—it’s DOA, or “Dead On Arroval.”

Look no further than the Volt.

 

[neroden]

Not a chance. They'll just look to the next debt payment as the catalyst that will expose Tesla's cash flow issue and lead to bankwupcy.

Dan

I believe that's November 1, for the 1.625% notes inherited from SolarCity.

 

[Curt Renz]

I always referred to that as a standard transmission.

That was the euphemism eventually used by the industry. Actually, it was more often called a stick shift.

 

[Mars ☰mperor]

Regarding margin on SR, I think we need to go over what Elon said on Q4 earnings call:

"
Toni Sacconaghi -- Sanford C. Bernstein -- Analyst

OK. OK. And as you think about 2019, you talked about sort of scenarios for demand and how you plan to roll out the intermediate range and then ultimately the standard range. What is -- if you do have to make a trade-off on volume or profitability during the course of the year, meaning to get the volume you need or you think you can deliver, you have to go to lower margins or vice versa, where's the trade-off? Is -- are units produced most important to you? Or is delivering the 25% gross margin more important? So if you have a chance to deliver 450,000 or 500,000 cars but they'll be more standard editions and gross margins will end the year at 20%, is that -- are you willing to make that trade-off?

Elon Musk -- Co-Founder and Chief Executive Officer

My guess is it ends up being sort of about the six and one-half [Inaudible] where if there's a given amount of free cash flow, you sort of decide-you decide to achieve that with a smaller production or smaller volume of cars or at a higher margin or large volume cars at a smaller margin. I think we're already toward the second. We'd rather make more cars at a lower margin, but I think it's more or less a flat rate.
"

I think this is exactly what they are doing.
Elon always says what he thinks, and do what he says (maybe a little late but that's because the bar is super high).

 

[Buddyroe]

Y
In fact, if we bother to review Tesla guidance, it was accurate. Musk was apparently just clarifying what he had intended to state and was not correcting a mistake as the SEC claims. In other words, Musk intended to say something different, but what he did say also is true."

Actually [and I'm a Tesla owner and mega-fan], guiding for 350k to 500k production is not the same as "will build 500k". There's a HUGE difference between a range of 350k to 500k and just plain 500k - the range leaves you speculating on production - "will build 500k" does not.

 

[Opus BC fan]

One other factor to consider in the Q1 profit guidance. Two weeks ago I received an email reminding me that the referral program had ended and the rewards had to be claimed by today. It appears to me that they wanted to get this liability off the books in the first quarter.