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

[JBRR]

Note that a really large short can probably capitulate by betraying all the other shorts: buying lots of out-of-the-money calls whose size is larger than the short position, then capitulate really hard and publicly, helping trigger an even larger short squeeze.

For example if Jim Chanos is short TSLA 500,000 shares, and he buys 5,000 call contracts, he not only caps his losses at $700, but can also disclose the fact that he covered after he has done so, and profit from the calls. With more contracts he could earn even more.

(I'm not saying that this is what is going on: it's quite probable that TSLA is only a couple of percentage points of Jim Chanos's portfolio, sufficiently covered by the long positions that are 190% of his short positions, and that he intends to wait some more and see what happens.)

Finally, it's also possible that the buying activity is by options market makers and other options writers, who don't like the tail risks of the $700 calls given the recent rise of TSLA and would rather face a calculable loss than a blowout move.

Options market makers are almost by definition writing naked calls and delta hedge on the way up, and are running after the price - as @ReflexFunds's calculations are demonstrating it: every +$10 TSLA rise triggers +2,100,000 TSLA buys in market maker delta hedging alone (!) - it might be even more than that at current price levels:

Reflex Research on Twitter

"2) Tesla Calls open interest (on 71m shares):
Current market value of all call options is $6.8bn ($2.5bn expiring <2 weeks). $6.2bn are in the money."

"6) Net delta exposure from options market:
The gross delta exposure from Calls, Puts & Convert Hedges can be netted out. 38.1m long from Calls, 5.5m short from Puts, 4.0m long from convert options hedging. This nets out at 36.6 million Tesla share long, currently worth $14.0bn."​

The delta hedging might be more than what Black-Sholes predicts, as IMO options market makers cannot ignore the fat tail risks after such a fast rise. It's likely a stronger force currently than the still very high short interest - and the two buying forces add up.

Options writers might also not have the trading power to limit options payouts via manipulating the stock price next Friday anymore, given how large the open interest on the 2020/01/17 options chains is.

I.e. beyond the S&P 400/500 inclusion buying we might also be seeing an "options squeeze".

Not advice.

Call/put skew.

from TSLA put/call skew goes into Ludicrous mode : options

 

[JBRR]

What's missing from the discussion is the highly unusual volume.
Looking at shares traded in isolation is missing information.

Avg daily volume is 9m ish shares - at a share price of, lets say, 300. 2.7b$/daily volume.

Yesterday we traded 33m shares at avg 490. 16b$ volume. Looking at shares traded in isolation you would conclude that volume was ~3x. It's almost 6x.

 

[FrankSG]

Tesla was on Chinese nationwide TV again:

RayTesla️ on Twitter

 

[LN1_Casey]

Holy Mother of Musk; has anyone looked at the inventory of Tesla recently?

I was doing my usual stalking, and there were no Model S Tesla within range of my usual stalk points. Not used, NEW inventory. I went to EV-CPO.com, and there are 11 state wide.

1-MF-1. 0 Model 3's (of course), and 28 Model X's (1/2 of which are P100DLs).

They really were selling everything not strapped down last Q! They need the slight drop this Q to restock their stores!

 

[lklundin]

One of Twitter's many Tesla fans created a poll for Model 3 owners regarding their take on the Acceleration Boost upgrade.
It had three categories:
1) bought it,
2) did not buy it,
3) not a Model 3 owner,
(so no category for non-eligible Model 3 owners, i.e. such owners could have ticked 2 or 3 or none).

There were a couple hundred samples in category 1 + 2, with 5.7 non-takers for every taker of the option, i.e. ca. 15% take-rate in this small sample of Model 3 owners (and tweeters).

One could multiply this ratio to the number of eligible Model 3s sold, to get a rough estimate of the revenue from this 2k $ option. For the combined Q4+Q1 earnings (which as a sum is relevant for S&P 500 inclusion) this could have an actual impact, since this revenue comes at almost zero cost. Including ongoing Q1 Model 3 deliveries, I believe this Q4 + Q1 revenue (and profit) could be up to 100M $ (i.e. 50k upgrades).

How many Model 3s have been sold, and what fraction of them are eligible for the Acceleration Boost upgrade?

 

[DrMazeppa]

In the UK, which is likely to be an important market for Q1, there is zero cars (3/S/X) in used inventory.
In new inventory, 30 model X and 44 model S (half of which performance).

 

[DrMazeppa]

Last time I went to London, it was full of Toyota Prius...

"From October 2021, the Congestion Charge* exemption will be removed from plug-in hybrids and only be available to fully electric vehicles".
Which is going to be up to around 3k every year for daily commuters.

So, Londoners (but the invitation is extended to all drivers in the UK ), which car are you going to buy now?


* which you pay to go into central London, but may be extended in the near future

 

[LN1_Casey]

Last time I went to London, it was full of Toyota Prius...

"From October 2021, the Congestion Charge* exemption will be removed from plug-in hybrids and only be available to fully electric vehicles".
Which is going to be up to around 3k every year for daily commuters.

So, Londoners (but the invitation is extended to all drivers in the UK ), which car are you going to buy now?


* which you pay to go into central London, but may be extended in the near future

while I was in London/the UK this holiday period, I Ubered a number of times. About 1/2 of the time I was in a Prius, and about 1/2 of the remaining 1/2 (so 1/4) I had upgraded to Uber+, so didn't count.

I was really hoping for a Tesla, but there wasn't the Green Uber option, and the Premium ones had been Mercedes or BMW.

 

[RobStark]

In the Manufacturers ranking, Tesla (29%, +4%) benefited from its last month of the quarter peak to distance itself from Kia (22%, -3%), winning this year Best Seller award, with Hyundai ending in Third, with 14% share, well ahead of the 4th Renault, with just 6% share (that Captur PHEV is badly needed, if Renault wants to expand its sales).

EV Sales: Denmark December 2019

Good thing Elon didn't close down Tesla Denmark a few years ago after sales crashed following an end to EV incentives.

 

[HG Wells]

Something is wrong with my monitor.
TSLA is this funny color.

 

[MABMAB]

Managers can beat the market. It’s rare but doable. My grandfather-in-law Seth Glickenhaus did it for many years. Not a lot of players out there like he was. He passed away a few years back at 103. One of our last conversations was him asking me what I thought about Tesla. My answer was dead wrong.

Yeah, you can't just leave this "conversation" out there for us to wonder about. Do tell...

 

[DrJohnM]

Something is wrong with my monitor.
TSLA is this funny color.

View attachment 498180

If you look that the Frankfurt exchange (ticker TL0), you will see the price is at €443.15. Converting that to USD gives $492.30, so it's a little up in European markets. Colour fixed.

(ps, don't worry about the red TL0 price - driven by the exchange rate).

 

[lklundin]

Some good new from Norway.

The head of the fire fighting effort at the Stavanger airport parking garage has made an interesting statement to Norwegian state media, in my translation (!):

"Here several electric cars burned without giving large challenges for us in the fire and emergency services. This I believe was caused by the battery packs not catching fire. They lie in the bottom of the car and lie in safe surroundings while the car or that which is above like seats and other has burned up."

Additionally, he stated that this fire will prompt Norwegian authorities and battery manufacturers to investigate how electric car fires can be put out more quickly, which will likely lead to new requirements also for parking garages (which are currently not required to have a fire suppression system).

Skal forska på elbil-brannar: – Med dagens utstyr er det umogleg å stoppa spreiing

 

[Todd Burch]

Some good new from Norway.

The head of the fire fighting effort at the Stavanger airport parking garage has made an interesting statement to Norwegian state media, in my translation (!):

"Here several electric cars burned without giving large challenges for us in the fire and emergency services. This I believe was caused by the battery packs not catching fire. They lie in the bottom of the car and lie in safe surroundings while the car or that which is above like seats and other has burned up."

Additionally, he stated that this fire will prompt Norwegian authorities and battery manufacturers to investigate how electric car fires can be put out more quickly, which will likely lead to new requirements also for parking garages (which are currently not required to have a fire suppression system).

Skal forska på elbil-brannar: – Med dagens utstyr er det umogleg å stoppa spreiing

i don’t get it. Why would you say “the electric car batteries didn’t burn” and then at the same time say “this will help us better understand how to put out electric car fires?”

If the interior of the EVs burned up—that part is essentially identical to ICE cars.

Why so much attention to EVs given the fire was caused by an ICE and the authorities are saying that the EVs didn’t give any trouble when extinguishing the fire?

 

[steak&chicken]

Something is wrong with my monitor.
TSLA is this funny color.

View attachment 498180

I'm seeing this statement from news feed.
"Baird Downgrades Tesla to Neutral from Outperform; Lowers Price Target to $525 from $355."

It doesn't even make sense since the old price target was at $355. How is $525 lower than $355? Ben Kallo is Baird analyst. He's husband of Melissa Lee of CNBC.

 

[mongo]

We’ve been talking about S&P 500 inclusion here and its possible effects on the stock price, but what will it take to have TSLA included in the S&P 100 (and what could the extra effect on the stock be)? Does anybody know what the requirements are? I’ve seen that at least 20 members of the S&P 100 have a smaller market cap than TSLA, so that should not be a barrier.

Rules doc attached for reference.

The 100 is committee's choice

S&P 100 Index Universe.
Index constituents are drawn from the S&P 500. Constituent Selection. Constituent selection is at the discretion of the Index Committee. Generally, the largest and most stable companies in the S&P 500 that have listed options are selected for index inclusion. Sector balance is also considered in the selection of companies for the S&P 100.

Weighting. The index is weighted by float-adjusted market capitalization.

There is also an equal weight 100 index.

The Top 50 is market Cap based. #50 on the S&P appears to around $462 Billion.
Edit: misread weighting as trillions, #50 is ~$126 Billion

 

[DrJohnM]

Last time I went to London, it was full of Toyota Prius...

"From October 2021, the Congestion Charge* exemption will be removed from plug-in hybrids and only be available to fully electric vehicles".
Which is going to be up to around 3k every year for daily commuters.

So, Londoners (but the invitation is extended to all drivers in the UK ), which car are you going to buy now?


* which you pay to go into central London, but may be extended in the near future

The congestion charge is there to reduce congestion. There is an incentive for 'green' cars to help promote reduction in pollution, however, the real kicker for London is the Ultra Low Emission Zone:

To help improve air quality, an Ultra Low Emission Zone (ULEZ) operates 24 hours a day, 7 days a week, every day of the year,except Christmas Day, within the same area of central London as the Congestion Charge. Most vehicles, including cars and vans, need to meet the ULEZ emissions standards or their drivers must pay a daily charge to drive within the zone.

• £12.50 for most vehicle types, including cars, motorcycles and vans (up to and including 3.5 tonnes)
• £100 for heavier vehicles, including lorries (over 3.5 tonnes) and buses/coaches (over 5 tonnes)

The ULEZ is a relatively small area. There is also the Low Emission Zone and as from 26 October 2020, Low Emission Zone (LEZ) emissions standards will be tougher for heavier vehicles.

For heavy diesel vehicles (buses, coaches, lorries) the ULEZ will be extended to cover the whole of Greater London in 2020. For cars, vans, minibuses and motorcycles, the ULEZ will be extended to the North and South Circulars in 2021 (this is significantly bigger than the current ULEZ zone size).

Checks are based on numberplate recognition with that tied back to the registration document (and therefore the emissions as per the type). You have to check/register your vehicle and pay (if needed) before entering the ULEZ/LEZ

 

[Artful Dodger]

We’ve been talking about S&P 500 inclusion here and its possible effects on the stock price, but what will it take to have TSLA included in the S&P 100 (and what could the extra effect on the stock be)? Does anybody know what the requirements are? I’ve seen that at least 20 members of the S&P 100 have a smaller market cap than TSLA, so that should not be a barrier.

I did some research last week that showed at the (then) current Market Cap, TSLA would be ranked #67 on the S&P 500. When TSLA reaches $555 it would be rank at approx. #50.

Since the S&P 100 is a subset of the highest Market Cap equities listed on the S&P 500, TSLA's ranking in either index should be about the same.

Cheers!

 

[Jack6591]

Papafox,

My family and I have benefited from your business acumen and astute observations.

Thank you,

JB Leonard

 

[Fact Checking]

Key GF4 milestone cleared:

Gigafactory4 on Twitter

Cost of the 300ha land for Tesla: 41 million Euros.

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