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

[Papafox]

We won't really know from the FINRA 'short selling' stats how much short interest reduced last week: it's very imprecise due to the way entire block sales of thousands of shares can be flagged by brokers as 'short' if even just a single sale there is from a known short seller.

As Ihor pointed it out numerous times the FINRA stats seriously over-estimate the amount of short selling - the true proportion of short sellers is closer to 10%-20.

I can confirm this based on analysis of actual transaction level logs of NASDAQ short selling activities: for example on 2018/09/18 there were 3,359,275 TSLA shares sold short, while the daily volume was 16,550,000. That's a true short selling percentage of only 20.3%, on a day that featured a major bear raid and a lot of short selling. (This data might be interesting to @Papafox too.)

FINRA stats also have trouble catching "unknown" short sellers (i.e. big short sellers with multiple accounts over brokerages and creatively moving around positions) and with 'dark pools' (interim trading platforms that effectively anonymize the source of the trades).

With all that in mind, this is the FINRA short selling stats for last week:

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So yes, it was a lower percentage - but this is not necessarily indicative of true short covering. Friday price action definitely gave me the feeling of significant short covering.

I'm curious where you obtained the 3,359,275 shares sold short number for TSLA shares shorted on 9/18/2018. Last year I queried Dusaniwsky to see if he could give us a rough estimate of actual short-selling on a day when shorts were tagged with 50% of the selling. He felt he could not give an accurate estimate, with the batching of shares issue being a factor (as you mentioned). It seems to me that if you can get numbers like this, Dusaniwsky can too and once you have the actual number it's not hard to come up with an actual percentage of selling by shorts.

We've seen some pretty significant percentage of selling by shorts on days when we're told that short interest has not changed. Therefore, I assume that part of the percent of selling by shorts number is due to batching, part is normal market-maker short-selling as an expedient for trading, and some is part of algobots working the stock with both buying, selling, shorting, and covering to extract value and (I believe from watching the charts) for also manipulating the stock price. Of course some is also shorts opening new short positions in the stock.

Anyway, please let us know where that number came from so that we can better understand the implications.
Thx!

 

[SteveG3]

A short-covering rally is the definition of a short squeeze. And this is one. Our last big one was after Q3 '18.

They'll be back, of course - at least those who have the money to come back. Some at $350, some at $380, some at $400.... they only peel off for good when they get burned badly enough, and repeatedly enough, that they give up. Usually with some remark along the lines of, "I was right and it's still a zero, but the market can remain delusional longer than a short can remain solvent."

I'm somewhat concerned that people start having expectations of a "short squeeze." I think most people's notion of such a squeeze is something on the order of the price going up several fold in a matter of days due to the bulk of the shorts receiving cascading margin calls. The scale of the VW squeeze tantalizes people.

I don't think there is actually any formal definition of a short squeeze... i.e., no percent of shares covered over X days, no spike in price with Y amount of shares traded involving shares bought by shorts, etc. (fwiw, a quick google search didn't turn up anything but vague & mushy descriptors, no real definitions).

Again, I think most people's assumption is a day where they pull up a quote to find that their stock has doubled, and is just starting an ascent... sort of a jaw dropped, just watching the slot machine jackpot just continue to gush dream notion.

I genuinely think this sort of gusher day or two is what most people think of as a "short squeeze," and I think if any of us want to discuss a short squeeze, but, have in mind a different scale of event, it's most helpful to say clearly the kind of movement you have in mind.

fwiw, in the time I've been following Tesla closely, mid-2012, the short position as its low point was about 18%. That is still a massive outlier short position for a public company, at least in the US. I do not think Tesla has ever experienced a short squeeze, or ever will (of that "slot machine gusher" sort).

 

[SPadival]

If anyone is interested, Eric is filling a complaint with the SEC about the obviously corrupt “journalist” and Chanos toadie, Bethany McLean:

ES on Twitter

Hey @SEC_Enforcement if u want to bring down some big ones. @bethanymac12 is engaging in market manipulation. You should get her emails before her $SCTY & $TSLA article. Its a coordinated attack.

Im going to file a report & Others should as well.

The back story is the incredibly incriminating mails during the Fairfax saga, between her and Marc Cohodes, an infamous short seller who roughs up people & had FBI agents turn up at his chicken farm

https://www.sec.gov/comments/s7-31-08/s73108-59.pdf

 

[StealthP3D]

The word battery literally refers to a container of cells. So not making cells would in no way imply any imprecision by Elon.

If Musk is using the word "battery" to mean a "container of cells" then what is he using the word "module" to refer to?

 

[brian45011]

One of the great mystery is that neither before nor after the ER did I hear about margin maintenance increase. Not that I've checked, but I usually read this in some news so I am just assuming they haven't raised.

Watch the "hard to borrow" fees as the early indicator.

 

[Remus]

Q folks are obsessed with some depositions about the solar City law suit.

I really hope they take a second mortgage and pile on.

 

[hobbes]

Dunno..... what you see is what I saw.
Seems strange to have 2 cords if only one is usable at a time?

Seen on all Superchargers in Europe: 1 cable for Model S/X with type 2 connector, 1 with CCS plug for Model 3.

 

[SPadival]

Almost a mea culpa by Babycharts. First 30 mins or so is worth listening before it goes down into RussiaGate conspiracy theory land

 

[SteveG3]

And since it includes hybrids and hydrogen cars, it's really a bill to help the ICE companies cloaked in EV publicity.

Yup.

What's more, let's not forget, Chanos' big role in helping Biden's campaign get started this year,

Joe Biden prepares for New York fundraising blitz with Gov. Andrew Cuomo and short seller Jim Chanos

 

[SteveG3]

Charley is spreading false information that may impact the SP of a stock...I wonder how his employer (WSJ) can tolerate this.
Solarcity asked vendors to extend payment terms. Extending payment terms has no impact on COGS and does not impact the income statement. For Solarcity, it was to keep invoices longer in accounts payable and not to deplete cash. So for Charley to retweet a comment that COGS and the P&L are impacted makes him a party to the spreading of false news to impact the stock price of Tesla.

WSJ is owned by Rupert Murdoch. Tolerate? I think this sort of thing gives Rupert a giddy feeling.

 

[Artful Dodger]

Serious question, how did we get from here?

Uh, the Dysan Effect?

Dyson scraps plans for electric car

Waiting for Ford to pull out of Rivian. "It's not commercially viable" <shrug> followed by "We will continue making the F150 which is what people want".

Hope that Cybertruck is a homerun, and I hope the new factory and bty workshop is in the heart of 'truck country'.

 

[brian45011]

This was discussed a while back.

It will depend on how good Tesla is in selling to big builders. Builders decide what goes in new homes - very few people build their own homes. If the builders decide why not let Tesla pay for this and they get the compliance for free - then we'll see big sale for Tesla but little revenue.

Good summary of why Tesla's TAM is limited to re-roofs --we tried for over a year to get Tesla to work with our custom new home builder-zero interest and no idea how to make it possible. Tesla may be able to attract a few boutique builders in California, but there is insuficient in-house competence to structure any meaningful relationship with large nationwide or regional tract home builders.

Needing competing teams to figure out at this point the best techniques for installation ought to be a canary.

 

[JBRR]

Record option volume in Tesla as sentiment swings to bullish extreme : options

 

[Buckminster]

If Musk is using the word "battery" to mean a "container of cells" then what is he using the word "module" to refer to?

Elon should not be using the word battery on its own. He is a naughty boy!

Maybe the car is now the container of cells and therefore the battery. That would then make the human the cell - consistent with the Matrix movie.

If you take the red pill, you will find out what he meant by battery. Is it worth it though? We're on to a pretty good thing now at SP of $328.

If you need more evidence, Spiegel using a laptop in the bathroom is an obvious glitch. If he does it again, we are in real trouble.

 

[Artful Dodger]

Unfortunately, that would be the definition of illegal insider trading

Are you certain that participating in the deriviatives market constitutes insider trading? I recall that back in the '90s Microsoft made 11% of their income through derivatives on MSFT.

Has there been a change in SEC rules regarding derivatives? Can you point to the regulation? Thanks.

 

[M3Rider]

I found this Nextdoor post to be a thinly veiled shot at Tesla. Couldn't decide if it was deliberate trolling/FUD, someone with a short position, or just someone who's been suckered by the false information out there. Contrary to what people may think about the Bay Area being a haven for Tesla, there's a lot of ire like this in San Francisco.

View attachment 470609

I've had some of these discussions on the nextdoor as well.
There's lot of FUD around and many people like quoting it.

Did Elon ever create the anti-FUD FAQ on tesla site like he was going to?

We really need the arguments well assembled / organized, so you can quote 1-2 sources versus 10.

I think couple of things that have some merit are:
- lack of battery recycling, so we can only say it's coming and get laughed at;
- higher tire wear due to weight, but that's comparing to the same class car. If someone buys model 3 instead of suv/truck, they are having positive effect.

The argument about being frugal, bicycles, public transport is obviously BS, because it doesn't work today. For every frugal person there will be 10 wasteful people. The only way to get them off their polluting tanks is a technological breakthrough, which we need even if initially this tech is a little bit worse in couple areas - like recycling should come with the volume and volume needs to happen without silly preconditions.

 

[Remus]

Almost a mea culpa by Babycharts. First 30 mins or so is worth listening before it goes down into RussiaGate conspiracy theory land

He talked about the capital raise in the second quarter but omitted his famous "can raise can leave" lie. How convenient!!

 

[Carl Raymond]

For every frugal person there will be 10 wasteful people.

Summer is (almost) here and the parked car idlers, keeping cool while the globe heats, are back. They drive me spare. For every cyclist there are two parked car idlers. It’s worth electrification just to eliminate this ugly phenomenon alone.
Edit: note, Southern Hemisphere.
Edit: 100% RE worldwide shift is taken as given

 

[brian45011]

Good if true but we are only surmising. Bit of a missed opportunity that the event made no attempt to address investor questions.

Bearing in mind the backlog of demand can’t be satisfied for ages, I’m not really sure who the call on Friday was aimed at.

The solar glass is 15" x 45" or about 4.7 sq. ft. How thick? What weight/piece? How are field cuts made for penetrations. ridges, valleys, edges? How are valleys sealed?

Replacing a roof as fast as with composition shingles is an aspiration.

 

[Fact Checking]

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Sounds risky
Which fault line do I live on? A guide to the major Bay Area faults

Physics: most tunnels are actually safer during an earthquake than being on the surface.

On the surface, any big industrial mass exposed to an earthquake is basically an upside down pendulum hanging in the air that might resonate with the ~20 Hz frequency of a typical earthquake. Once a ~100,000 tons building starts moving beyond its tolerance, it guarantees major structural damage. Protecting against this is complex, expensive, hard to test and error prone.

Tunnels on the other hand are embedded in layers of soil or rockbed, and the seismic waves have little to resonate with - they pass through. Steel reinforced concrete tunnel walls in a cylindrical shape are incredibly strong and there's numerous historical examples of large urban tunnels with much larger diameters surviving major earthquakes with little to no damage, while the surrounding residential areas got major damage.

FAQ — The Boring Company

• 1994 Northridge Earthquake: no damage to LA Subway tunnels
  
  
• 1989 Loma Prieta (Northern California) Earthquake: no damage to tunnels, which were then used to transport rescue personnel
  
  
• 1985 Mexico City Earthquake: no damage to tunnels, which were then used to transport rescue personnel

So unless the tunnel crosses the major fault line which shifts on the surface (most don't), or there's some particular quirk in the local geology, they are basically earthquake shelter bunkers. I wouldn't be surprised if the Boring Company was modeling up to Richter scale 11 earthquakes - against which you can do very little on the surface in advance, other than praying.

Anyway, Tesla using tunnels to transport parts and materials within their factory should be fairly safe, even in the Bay Area.