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

[Xpert]

So, any interesting observations in the chat last night? No way I can catch up with all this now, lol

After-hours trading was amazingly flat after such a terrible report. Apparently you can price the apocalypse in

So, I've come to the acceptance that while I'm pretty good at predicting what's going to happen at Tesla, I'm simultaneously pretty freakin' terrible at predicting how the market is going to react in the short term, and it's cost me a ton of money :Þ. So I'm going purely to longer-term investments at this point. Will be switching completely to buying Jan '20 $300-$360 call spreads and selling stock-and-cash-backed Jan '20 $150-200 PUT spreads. Will roll at any point that the stock hits $310-ish in the good case, or if theta starts becoming relevant in the bad case.

Only question is to how to time entering into the above. It's hard to envision the stock rising on the day after such an awful report, but given the after-hours trading, that might well happen. I'm thinking about starting the buys/sells immediately after market open, and staggering them over the course of the next couple hours. Thoughts?

(As a side note, I'm very excited about Q2. Starting right off the bat )

Staggering buys makes sense, and In my experience, not good idea to buy right away. I usually wait for the bear analysts to throw out their downgrades in force and buy on those dips.

 

[KarenRei]

Staggering buys makes sense, and In my experience, not good idea to buy right away. I usually wait for the bear analysts to throw out their downgrades in force and buy on those dips.

Are you expecting downgrades today? An SEC case update comes out this evening; I don't want to sit that out (#ReasonablenessPantsSummit2019 ). The Q2 report, the SEC case, and demand fears have been the three big overhangs on this stock. The former is now out, the second should theoretically resolve soon, and the latter should start to clear up over this quarter.

 

[Xpert]

You expecting downgrades today? An SEC case update comes out this evening. I don't want to sit that out. #ReasonablenessPantsSummit2019

Yes I do, if not tomorrow. We shall see. I also think SEC is in the bag with the BoD reduction perhaps is part of the deal.

 

[Carl Raymond]

It's hard to envision the stock rising on the day after such an awful report

I thought the stock dropped $10 prior to earnings on the back of a faked battery explosion. That at least should be unwound.

 

[KarenRei]

Yes I do, if not tomorrow. We shall see. I also think SEC is in the bag with the BoD reduction perhaps is part of the deal.

Hope so. A downgrade early today would be very useful.

 

[MartinAustin]

Since last year they have been behaving in a way that companies do when they only spend money they make... and don't go to the markets for more injections & dilutions. Lots of employees laid off and other cutbacks all over the places, in addition to (obviously) lots of work to improve efficiencies all over the company.

All this while analysts like Adam Jonas have been building in the assumption of cash raises into their stock valuations.

Do we really think Tesla will go ahead and do a cash raise even though the stock is a long way from its ATH? I tend to doubt the idea. Elon will want to honour the laid off workers, for one thing.

This is his way to say F.U. to the shorts, given that the company will stay publicly traded for now. Longs have to ride it out :/

 

[Tslynk67]

Just caught up with the EC, personal thoughts:

• Despite all the turmoil we perceive as investors, everything sounds very calm and in control
• As said, removing the delivery waves - and hopefully the EOQ madness - will be very positive all round, not least of all perceptions
• Zack sounds like he knows his stuff, comforting
• Surprised to see LR being the most in-demand M3 variant, but I'll take it - after initial SR+ peak, orders trending back to LR
• 20% M3 margin at this point is great, would be interested to know what it is for S/X though
• 50% cheaper per unit capacity for GF3 - wow!
• "Hard-Core tents, not cub-scout"
• Insurance rates based on whether people drive crazy or not - hmmmm, might not work for me then
• Private off the table by the sounds of it
• "Raising capital should not be a substitute for operating the company profitably" - like that
• "Some merit in raising capital and now would be about the right timing" - that is a volte-face from previous comments
• Ha, secret-sauce questions, but indeed Maxwell sounds like it's going to happen

Given the huge FUD, bear and short attacks and general negative sentiment, I'm feeling pretty bullish. Tesla is stronger than ever IMO.

Now we need an SEC resolution to give us a 10% pop. And Maxwell to close successfully. Other than this, I think no-news is good-news for a couple of months.

 

[Xpert]

Just caught up with the EC, personal thoughts:

• Despite all the turmoil we perceive as investors, everything sounds very calm and in control
• As said, removing the delivery waves - and hopefully the EOQ madness - will be very positive all round, not least of all perceptions
• Zack sounds like he knows his stuff, comforting
• Surprised to see LR being the most in-demand M3 variant, but I'll take it - after initial SR+ peak, orders trending back to LR
• 20% M3 margin at this point is great, would be interested to know what it is for S/X though
• 50% cheaper per unit capacity for GF3 - wow!
• "Hard-Core tents, not cub-scout"
• Insurance rates based on whether people drive crazy or not - hmmmm, might not work for me then
• Private off the table by the sounds of it
• "Raising capital should not be a substitute for operating the company profitably" - like that
• "Some merit in raising capital and now would be about the right timing" - that is a volte-face from previous comments
• Ha, secret-sauce questions, but indeed Maxwell sounds like it's going to happen

Given the huge FUD, bear and short attacks and general negative sentiment, I'm feeling pretty bullish. Tesla is stronger than ever IMO.

Now we need an SEC resolution to give us a 10% pop. And Maxwell to close successfully. Other than this, I think no-news is good-news for a couple of months.

Well laid out.
Speaking of Maxwell, I’m thinking to buy their stock with the thoughts that the deal will go through in May...but not sure worth the risk of a breakup? Want to know what folks think on this play.

 

[KarenRei]

Well laid out.
Speaking of Maxwell, I’m thinking to buy their stock with the thoughts that the deal will go through in May...but not sure worth the risk of a breakup? Want to know what folks think on this play.

You could buy the stock with protective PUTs in case it collapses down to its former value if the acquisition doesn't go through.

 

[Causalien]

Just caught up with the EC, personal thoughts:

• Despite all the turmoil we perceive as investors, everything sounds very calm and in control
• As said, removing the delivery waves - and hopefully the EOQ madness - will be very positive all round, not least of all perceptions
• Zack sounds like he knows his stuff, comforting
• Surprised to see LR being the most in-demand M3 variant, but I'll take it - after initial SR+ peak, orders trending back to LR
• 20% M3 margin at this point is great, would be interested to know what it is for S/X though
• 50% cheaper per unit capacity for GF3 - wow!
• "Hard-Core tents, not cub-scout"
• Insurance rates based on whether people drive crazy or not - hmmmm, might not work for me then
• Private off the table by the sounds of it
• "Raising capital should not be a substitute for operating the company profitably" - like that
• "Some merit in raising capital and now would be about the right timing" - that is a volte-face from previous comments
• Ha, secret-sauce questions, but indeed Maxwell sounds like it's going to happen

Given the huge FUD, bear and short attacks and general negative sentiment, I'm feeling pretty bullish. Tesla is stronger than ever IMO.

Now we need an SEC resolution to give us a 10% pop. And Maxwell to close successfully. Other than this, I think no-news is good-news for a couple of months.

Yes, stop promising something with a timeline so shorts don't have anything to attack with. If you don't need to raise capital, you don't need to drum up hype. And potentially push your company in ways that cost unnecessary money to meet your public promises.

 

[Xpert]

I wonder if they can bundle in the insurance, too?

Could be a great marketing tool - “buy S/X with ludicrous and we’ll throw in 1 year insurance for FREE...only at Tesla you get free car insurance!”

 

[Xpert]

Hard to argue against Ross comparing Uber valuation to Tesla
Ross Gerber on Twitter

 

[RobStark]

Panasonic may upgrade Japan plant to make advanced Tesla batteries: source

The Japanese production lines would only need minor changes to switch to 2170 cells from the 18650, said the person, who declined to be identified as the matter was private.

Japan's Nikkan Kogyo newspaper reported on Wednesday that the upgrade could take place in this financial year ending March 2020.

 

[RobStark]

Tesla's big advantage isn't just its technology, but also its bravado - CNN

 

[Artful Dodger]

Since last year they have been behaving in a way that companies do when they only spend money they make... and don't go to the markets for more injections & dilutions. Lots of employees laid off and other cutbacks all over the places, in addition to (obviously) lots of work to improve efficiencies all over the company.

All this while analysts like Adam Jonas have been building in the assumption of cash raises into their stock valuations.

Do we really think Tesla will go ahead and do a cash raise even though the stock is a long way from its ATH? I tend to doubt the idea. Elon will want to honour the laid off workers, for one thing.

This is his way to say F.U. to the shorts, given that the company will stay publicly traded for now. Longs have to ride it out :/

Yes, I think this analysis is spot-on. I also think Tesla self-funds while growing at max organic rate allowed by operational profits, with these two likely "power-ups":

1. GF3/Shanghai: obviously, phase 1 will not be the end. I expect at least 3 more phases to end with 2 Model 3 lines and 2 Model Y lines over the next 2 years, with profits from phase 1 financing capital equipment for phase 2, etc.
2. EU CO2/FCA Pool payments: I think by the time Tesla completes GF3 phase 4 (2021), about 2 B Euro in C02 payments will be avaiable to capitalize GF4/EU. Throw in some local loans (ABS Bonds) from regional Governments, and you've got the capital to build a new, lean Gigafactory w/o another Wall St. cap raise.

Though my investment time frame is 8 years, I think we'll see where things are headed well before then. Major milestones likely to be reached before the end of 2020:

• GF3 first Model 3 production
• first new Maxwell bty pack
• Semi first production
  
• Model Y first production

Who knows, by 2027 @neroden might have had his first robotaxi ride by then. Really, FSD revenue is the wild-card here, more precisely when it becomes the dominant revenue stream for the company. Could be a major accelerator, and is very unlikely to be any sort of a drag since it is even now self-funding.

What'd I miss? Anybody?

Cheers!

 

[Cobbler]

....

Volledig mee akkoord!

 

[Causalien]

This reddit user bring up a good point
Was stuck in a backup due to an accident and had been behind this motorcycle for the past 30 minutes or so using autopilot. At 0:38 in the video you can see it looks as though AP has confused the motorcycle with the Volvo behind it and starts to pull forward before I intervened to avoid hitting him. : teslamotors

I was kind of surprised when they said they were training the system to recognize two different objects as one. A bike mounted on a car is one car. This is one of those instances where humen trains the ai in the wrong way. Edge cases will interfere with each other.
Which is why, I am not very optimistic about the NN time line and that it is a linear progress not an exponential progress.

 

[aubreymcfato]

OT, still proving my point



Those are implications, and I don't agree that the implications follow. Get me a quote from an actual expert saying that LIDAR is necessary.

I've heard it said that the experts inside the organizations know that LIDAR is unnecessary but don't want to tell their bosses and get fired. I've also heard it said that they are basically saying "Without LIDAR, it'll take us longer", which might account for why the bosses want them to use LIDAR.

Oh, look. Carol Reiley is dissing LIDAR. In 2016.
The AI advance that helps computers recognize cats will also allow our cars to drive themselves

-----
These myths have consequences. People are spreading the myth that Musk was a lone visionary who "disagreed with the experts". But the thing is, he wasn't. The experts agreed with him on both of these things. The corporate boards and CEOs and Wall Streeters disagreed with him, but since when were they experts on anything?

(Worthy of note, in our world today, experts don't seem to control the political scene, and they don't seem to control the financial scene. :-( And they don't control the media, either. Instead, ignorance walks the halls of power. So maybe it's understandable why one would get the wrong impression. In fact, Musk's status as someone rich and powerful who actually listens to experts most of the time seems rare, sadly.)

This.
With DaveT we discussed about psycology of analysts VS Musk. He told us few insightful anecdotes about Musk and analysts.
There's a lot to be said on this topic.

There is the fact that the Asperger-like, engineer/scientist mindset that Elon brings on the table is rarely seen at the top: analysts and other CEO are usually alpha-male types with a very different background and psicology.
They don't get Musk, they don't get his attention to technological details, to facts, or even his probabilistic mind.
They are more accustomed to the politics and psycology of power: with has a much more fuzzy/messy logic.
Power is nondeterministic, messy stuff.

Elon is another beast, he thinks differently. It really changes everything when the CEO of a big company *understands* in detail what his experts are saying. He can be really bold in his decisions.

Yesterday I realized a funny thing: a lot of the best analysts are women.
ARK CEO and mathematician, Andrea James, the Canadian startup CEO (don't remember her name)...
I think they are less clouded in their judgment by their ego/prejudice like some male analysts are. I think they understand Elon's psychology better.

 

[Tslynk67]

TheStreet on Twitter

Is Cramer the wizard behind the short war? Anton was a day one hater and I thought even a keif wompy wheels fan. CNBC hosts any bear and the hosts seem unaware Elon owns a successful rocket company, or think rocket science isn’t what it used to be.

Anton Walhman: http://securities.stanford.edu/filings-documents/1034/UWL03_01/2005311_r05s_03CV04282.pdf

 

[PANN]

From the call "Zachary Kirkhorn: Yes, this is Zach. I mean, what we saw on February 28 when we launched the standard range, the standard range class variances, is that there’s pent-up demand for those products that released very quickly after it was announced. And then as more time has passed and order rates have stabilized, it’s starting the average ASP has actually been increasing each week ever since as the order rates stabilizes. And just under $50,000 ASP represents the most recent one, and we think it’s starting to stabilize there. And we’ll see where things trend in EMEA and China as well, but what we’re seeing in North America is that over 50% of our orders of the long-range variance in ASPs."

Most recent Model 3 ASP at $50k in N.A. is much higher than I thought (highlight mine), considering they have been delivering for more than a year in N.A. Seems long term demand is strong at this healthy ASP level. Also, am quite impressed with Zachary after this call.