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

[Nuclear Fusion]

I think FSD purchases could be a large amount
Now that Navigate on Autopilot & Smart Summon are rolling out across the world, Q4 & Q1 numbers could get a nice boost

 

[gerebgraus]

I could be wrong, because I am not the market, but I believe it to be the former.

To get an answer to this, I think an update in TSLA's largest institutional holders will be more telling than the Q4'19 earnings. If it shows that there are a few big funds that accumulated very large TSLA positions during Q4 at prices in the high 300s, and 400s, I'd argue that these are more likely long term investments based on Tesla's improved fundamentals and Giga Shanghai + MY ramps, than speculative plays on strong Q4 earnings.

A lot of swing traders and hyped up longs have definitely jumped on board too, and these may take profits or just jump ship if Q4'19 disappoints or is just good. But I believe there must also be funds that are still on the fence about heavily investing in TSLA, because H1 2019 is still fresh in their memory, they believe Q3'19 could've been a fluke, and there were some one-time tailwinds (FSD deferred revenue, $85M in other income) in Q3'19.

My belief is that if Q4'19 (and Q1'20 / Q2'20) results are just good but no more than that, smart institutional investors will continue to jump on board. Q3'19 really was that good of a quarter in terms of cost reductions and margin improvements (in my opinion TSLA's best quarter ever). It's put Tesla on track to be a very profitable company, and even more so after Giga Shanghai and MY ramps. As long as they don't disappoint and miss targets, I think SP should continue to go up.

Personally, I'm expecting Tesla to beat expectations in 2020, potentially by quite a big margin. If things go really well, I think they could deliver as many as 650k vehicles, book $4B+ in EBIT, and have $20+ Non-GAAP EPS. If that happens, maybe we could see a SP of $1,500-$2,000 in 12 months.

None of this is advice, just my opinion on things, which could turn out to be wrong.

I will go out on the limb: The biggest effect on the earning call will be not numbers, but one single statement something like this: "Our cost of producing a car is lower than cars of German premium manufacturers in the same class. And our cost will keep dropping substantially"

 

[SageBrush]

In the interests of Noob education (me), I'd appreciate some discussion how one might gamble now on the likelihood of a near future severe short squeeze, e.g. an increase of SP by 50 - 100% and then a quick drop back to near baseline.

 

[RationalOptimist]

In the interests of Noob education (me), I'd appreciate some discussion how one might gamble now on the likelihood of a near future severe short squeeze, e.g. an increase of SP by 50 - 100% and then a quick drop back to near baseline.

Buy a near future call option with strike price at $700-ish. And have an open order to sell it at 10x the price you bought it for. Highly likely you lose your money... but chance of 10x gain. It's called gambling.

Much safer: don't mess with options, and just have an open sell order for your shares at $1000 just in case there's a moment of madness in the market.

 

[KarenRei]

In the interests of Noob education (me), I'd appreciate some discussion how one might gamble now on the likelihood of a near future severe short squeeze, e.g. an increase of SP by 50 - 100% and then a quick drop back to near baseline.

Ugh.

What's with all of this stock talk on this coronavirus thread today? Can we please stay on topic?

 

[Unpilot]

Crystal ball is starting to work.....all sign's point to GREEN today.

 

[Artful Dodger]

I will go out on the limb: The biggest effect on the earning call will be not numbers, but one single statement something like this: "Our cost of producing a car is lower than cars of German premium manufacturers in the same class. And our cost will keep dropping substantially"

Its not the Germans, or the Italians, its the Japanese Giants who should be nervous. They are next to fall behind the growing industrial giant known as Tesla, Inc. The MiC "World Car" will be a Corolla killer, and Japan has just a couple three years until its reveal.

Then sales of small cars will dry up while customers wait for their shiny new Tesla China "Model 2". Sales volume will be OFF.THE.CHAIN.

TSLA needs a CAGR of just 42% to surpass Toyota's market cap within 2 years. And Tesla's CAGR has been well over 42% for the past 6 years and accelerating. This will get ugly for Japan quickly, unless this Fall's "Big Accumulator" of TSLA has in fact been the Japanese GPIF. Then at least they'll have some leverage with Japanese Auto to steer them back on a path to sustainability.

Cheers!

 

[SageBrush]

Not wanting to belittle the information provided by Tesla/Elon Musk, the anti-GF4 protests fell apart mostly after the environmentally concerned demonstrators realized that many participants were from AfD, a right-wing, populist party (in favor of diesel cars and other non-sense).

Ein herber Schlag für die AfD

Sheesh.

Addendum:
My mistake ...
You mean that the neo-nazis were on the same side as the Enviros ?

 

[gerebgraus]

Its not the Germans, or the Italians, its the Japanese Giants who should be nervous. They are next to fall behind the growing industrial giant known as Tesla, Inc.

With a CAGR of just 42%, TSLA surpasses Toyota's Market Cap in 2 years. And Tesla's CAGR has been well over 42% for the past 6 years.

Cheers!

Exactly. As Tesla's cost keep falling fast in 2-3 years Tesla will have lower costs than the major non premium carmakers like Toyota as well.

 

[jeewee3000]

In the interests of Noob education (me), I'd appreciate some discussion how one might gamble now on the likelihood of a near future severe short squeeze, e.g. an increase of SP by 50 - 100% and then a quick drop back to near baseline.

Try the short squeeze strategies thread.

 

[Artful Dodger]

In the interests of Noob education (me), I'd appreciate some discussion how one might gamble now on the likelihood of a near future severe short squeeze, e.g. an increase of SP by 50 - 100% and then a quick drop back to near baseline.

Sasha's pretty good on technical trading, and has created a library of trading videos and has large number of Youtube subscribers:

 

[Tslynk67]

In the interests of Noob education (me), I'd appreciate some discussion how one might gamble now on the likelihood of a near future severe short squeeze, e.g. an increase of SP by 50 - 100% and then a quick drop back to near baseline.

I have ascending sell orders for tranches of 50 shares, this is the safest bet, I think. Still a risk it squeezes way above my highest, but given that it would normally drop back somewhere near the original SP, I'd still be able to massive increase my position.

I move these sell orders higher every now and again.

 

[The Accountant]

The "more likely than not" refers to 50%+ chance of being able to use the DTAs. So that depends on the expiration date of the DTAs in question. @The Accountant had a nice graph ~100 pages back, but iirc most of Tesla's DTAs don't expire until the late 2020s or even early 2030s. This goes to show how different the rules for accountants/auditors are, because of course there is no way management believes they are not going to be profitable within that time frame.

If they reduce their VA because they believe they'll more likely than not be able to utilize their DTAs, and then in a subsequent quarter this evaluation changes, they simply have to increase their VA again, and book a large tax loss on the P&L in that quarter. Basically the opposite would happen of what happens when they reduce their VA. You ideally don't want this to happen, because just like reducing the VA signals to the market that your expectations of future profits have improved, increasing VA usually signals to the market that your expectations of future profits have worsened.

The benefit of being conservative is not pumping up the stock price too much too quickly (which S&P 500 inclusion this early probably would do), not being under scrutiny of shorts and SEC, and saving up some good news for later in the year if Q4'19 is already very strong in and of itself. This all assumes that Tesla has a choice in all of this. It's entirely possible that a VA reduction from an accounting perspective is simply too early and cannot be reasoned for to auditors, or that a VA reduction at this point is so obvious that Tesla couldn't delay it even if it wanted to.

From my experience working at one of the Big 4 Public Accounting Firms (in the 90s), an issue this significant in both amount ($1.8B) and impact (ability to move the stock price), the Audit Partner and Tax Partner on the Tesla engagement would not make this decision alone. It likely gets sent to the International Office in NYC for the experts in this area to opine on Tesla's treatment of the Valuation Allowance (VA).

Btw - PwC does not dictate the treatment. Tesla will decide on the treatment of the VA and PwC will audit this treatment and opine whether it is in compliance with GAAP. If they disagree with Tesla, they will require that Tesla change the accounting and if Tesla did not, the Auditor's Opinion Letter in the 10K would reference this departure from GAAP (considered not a "clean opinion"). Almost always companies change their accounting in order to get the Clean Opinion letter.

One more important point from my experience. When an issue can be argued either way with supporting evidence (as I believe is the case with this issue), what the client decides gets accepted. I can make a strong argument on why it is "more likely than not" that Tesla will use the Deferred Tax Assets. I can also make a strong argument that it's not likely. Whatever position I present to the auditors, they audit that position; if it's supportable, then it is in line with GAAP. So in the end, I think whether we see a VA release to income will come down to what Tesla is comfortable with. Of course just my opinion.

 

[ammulder]

Yes, I think Q1 will be profitable: even with GF3 break-even there's both ZEV income expected from the FCA deal, and FSD deferred revenue recognition, plus there's the deferred tax asset.

Has anything indicated that the FCA credits will be paid quarterly, as opposed to e.g. in a lump sum early in 2021 after all the sales figures for 2020 are finalized? I haven't seen anything to say one way or the other.

 

[Artful Dodger]

Ugh.

What's with all of this stock talk on this coronavirus thread today? Can we please stay on topic?

Glad you asked that!

The Canadia man hospitalized in Toronto after returning from Wuhan province is in stable condition. However, medical authorities have now announced that his wife, who travelled with him to China, has also tested postive for coronavirus.

She is not sick. She has no symptoms, and remains in her home while needing no medical attention.

First Canadian coronavirus case officially confirmed, second is presumptive, 19 people under investigation

Coronavirus is turning out to be quite mild, or even asymptomatic.

#LETSEATATTHENOTHINGBURGERJOINT

Cheers!

 

[Alchemist42]

Having been a luker here for the last couple of months I just wanted to thank you all for providing great investment advice over that time. I just wished I had trusted you bunch more and bought a few more shares when they were at 230$. As a total newbie in trading, at first I planned on trying to time the market and using the volatility of TSLA to my advantage, however afer the foolish mistake of selling half of my portfolio right before the Cybertruck Unveil I rethought my strategy and I'm now firmly in the "buy and hold" camp. I even rebought my shares at a higer price over the last few weeks and I actually felt better about those purchases than back when it was cheaper - the looming bankwuptcy has now almost completely been removed from the realm of possibility. The way I see it, for a relatively young guy like me there are two possibilities if you have some money to invest:

1) If you believe in a future where humanity lives in accordance with nature, powered by regenerative energy and recycling, you should invest in TSLA, even if it might fall by 50% for a short time in the meantime. Long term there is only up, up, up.
2) If you don't believe in such a future, it is better not to invest your money at all, but to enjoy it while that is still possible.

Not advice.

 

[Chickenlittle]

In the interests of Noob education (me), I'd appreciate some discussion how one might gamble now on the likelihood of a near future severe short squeeze, e.g. an increase of SP by 50 - 100% and then a quick drop back to near baseline.

In my experience market corrections, recessions occur when nobody is thinking about them. When you hear a lot of people predicting them keep buying. Short squeeze usually the same way. The more people predicting the less likely. Despite egos here, opinions expressed on this forum are not consequential in moving the markets. Nor are most of the shorts on Twitter (exception people like chanos). You can hope for one but the surprise/shock that precipitates one will be obvious in hind site but usually not predicted by a large percentage of investors.

 

[Drax7]

Exactly. I question if many of these fines even come to fruition. With almost every other car company other than Tesla facing fines, I think there will be a lot of pressure to delay those fines. It negatively affects too many companies/workers/voters.

I agree, especially since it’s Tesla that benefits.

 

[FrankSG]

A little pre-market update:

Volume is not super high, and macros are up a bit.

Highest US stocks pre-market in $ volume:
1. AAPL - $136M
2. TSLA - $93.4M
3. BYND - $41.3M
4. AMZN - $35.7M
5. BABA - $34.8M

 

[jeewee3000]

Having been a luker here for the last couple of months I just wanted to thank you all for providing great investment advice over that time.

Didn't anyone tell you? Nobody gives advice on TMC. Hence your own "not advice" disclaimer.