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

[madodel]

While waiting for the ER, I came across this Motortrend article about Ford's agreement with Rivian to produce the first pure EV Lincoln SUV. It is illustrative of the challenges - pointed out frequently by forum members - that traditional automakers face in the BEV transition. What left my mouth slightly agape was this explanation of the respective contributions of Ford and Rivian under their agreement (perhaps not news to others here):

Under the agreement, Rivian's chassis provides a full electric powertrain with battery pack, electric motors, suspension, axles, and other key components. Ford will design the entire "top hat"—or body and cabin—of the vehicle, but must ensure the electronic control unit, infotainment systems, and other electronics can play nice with Rivian's electrical architecture.
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So the main value-add that Ford doesn't relinquish to Rivian looks to be software? But only software for the components in the "top hat". At least their sterling reputation as a nimble and innovative software powerhouse augurs success here...

This situation brings to mind the late Roman Empire as new enemies challenged imperial authority all along her periphery. Instead of responding with vigor and alacrity, the leadership in Rome decided to supplant tangible authority with abstract control by signing treaties with local warlords who agreed to defend territory from the barbarians in the name of Rome and under her nominal control. By following this policy of minimizing short-term pain, the Empire soon signed itself out of existence.

Not sure where Tesla fits in this analogy - maybe the Huns? And I suppose the Empire kept on trucking for a while longer in the East in the form of the Byzantines (maybe they're VW?).

Anyhow, antiquity aside, I can't believe how blindly these traditional OEMs seem to be marching to their own irrelevance.

I don't follow Rivian. Where are they or Ford getting batteries for this new Lincoln? Isn't that the problem all the brands that use LG skateboards are running into? Or maybe this is just another compliance car to pretend they are doing something about Tesla eating thier entire industry.

 

[JBRR]

time is money

 

[Cherry Wine]

I could have sworn I saw @Fact Checking throw out some projections related to HW3 retrofit costs, but now I can't find them. Since the pace of retrofits really seems to be picking up in Q1, I was curious if anyone had thought about what the impact to Q1 financials might be.

Further, is there any sense in trying to extrapolate the rollout to Tesla's attitude towards Q1? I can interpret it all ways: Q1 financials are looking so good who cares (bullish), Q1 is already a lost cause so might as well take the hit now (bearish), or with little to no regard to quarterly financials whatsoever.

As is typical, GUIDANCE is what all eyes are upon. Let's suppose TSLA reports lukewarm numbers, barely meeting expectations or barely making a profit, BUT they give strong guidance including the official announcement of the Model Y production and deliveries being WAY ahead of schedule, starting in Feb, and then Musk explains they have more built-in margin than the Model 3....why would the stock not go up?

I think Tesla needs to be fairly close to profit expectations to further establish its credibility. When credibility is established / reaffirmed, guidance means much more. So, we need more than just squeaking by on a profit IMHO if guidance is going to really juice the stock.

 

[RobStark]

i also don't see what's in it for the consumer. they'd get a Tesla motor and battery, but without autopilot / FSD / Tesla's software and UI? Who on Earth would want Ford software driving their Tesla powertrain?

Some customers highly value having 3k Ford service points across US, some strongly favor traditional exterior and interior styling, some think Teslas are for douchebags from Los Angeles and San Francisco.

It appears Tesla left some 18650 cells on the table last year but not 2070s.

There are some Tesla owners that have never supercharged. Stands to reason some will not value Supercharger Network if they haven't driven more than 100 miles from home in 10 years.

Some fear Autopilot, don't care, and don't value it. Saw I survey, AAA I think, said most Americans value AP features at $500.

 

[Davidzhao365]

When Elon receives the CEO Reward and exercises his options, does 40% of the option shares get sold and withheld for tax purpose?

Equity 101: How stock options are taxed | Carta

 

[canoemore]

I don't follow Rivian. Where are they or Ford getting batteries for this new Lincoln? Isn't that the problem all the brands that use LG skateboards are running into? Or maybe this is just another compliance car to pretend they are doing something about Tesla eating thier entire industry.

No idea

 

[Fact Checking]

Though, last time there was mass exuberance here I bought in a good chunk of previous gains before the ER and got crushed and lost it all.

Yeah, Tesla options across earnings tend to be binary, "taking a loss" better than -90% is rarely possible.

Lottery tickets in essence.

 

[Mich]

ATH close was 572 USD on Jan. 22nd. Today we might not get a new ATH during regular trading hours, but we might go with an ATH close into ER. That's a lot of expectations to fulfill...

 

[Cherry Wine]

Back when the stock was $480 I sold $520 calls covered by the 2 options I already had.I figured the stock would sort of float to ER, but it didn't, and if it didn't then I effectively got $543 for options I wanted to get out of at some point anyway. I suppose I don't particularly regret that, I'd picked a number that I figured I'd sell at anyway and used the sold calls to get a bonus on top of that. Water under the bridge.

All the exuberance has me pondering what to do with those though. The IV is high, if the stock dips or even just stays put then I'm better off continuing to hold those options and get out of them after the ER. My thought now is maybe I buy some new call options for $650 or some such so I have something to gain on a big ER rise.

Though, last time there was mass exuberance here I bought in a good chunk of previous gains before the ER and got crushed and lost it all.

You are me before Q3 earnings. Like many others here, I was shocked by those results and was really caught off guard as I had sold two near ITM calls (and some more a bit more OTM) expecting IV crush. Furthermore, I stupidly failed to cap them as spreads. I also stupidly refused to buy all of them back at a loss after the stock shot up to $300 and kept rolling the ones I had left out. Guess what? I am still carrying those sold calls today, and am now sitting on pretty massive unrealized gains. I sell weekly put spreads against them and keep them as one hell of a hedge should the stock tank back to $300...

I won't give you advice, but I know what I would do if I could go back in time to mid-October: I would cap the damn things. I also would not dare to sell more near ITM calls before this ER. The right guidance + profit could result in a thunderclap of an upward move.

 

[Nocturnal]

You are me before Q3 earnings. Like many others here, I was shocked by those results and was really caught off guard as I had sold two near ITM calls (and some more a bit more OTM) expecting IV crush. Furthermore, I stupidly failed to cap them as spreads. I also stupidly refused to buy all of them back at a loss after the stock shot up to $300 and kept rolling the ones I had left out. Guess what? I am still carrying those sold calls today, and am now sitting on pretty massive unrealized gains. I sell weekly put spreads against them and keep them as one hell of a hedge should the stock tank back to $300...

I won't give you advice, but I know what I would do if I could go back in time to mid-October: I would cap the damn things. I also would not dare to sell more near ITM calls before this ER. The right guidance + profit could result in a thunderclap of an upward move.

I didn't sell any calls because they were stupid cheap (god I wish I had thrown more than a grand or so at them) but I did sell about 20% of my shares before Q3 deliveries. I expected the typical drop after every Tesla event. I bought them back that week but I left a decent chunk of change on the table. Lesson learned. (maybe)

Today's run-up does have me a little nervous/confused because that was the pattern that I recall but this time I'm holding tight.

 

[StarFoxisDown!]

If they were to give guidance of an actual number range for Q1 like say 100-150 million GAAP profits, there's absolutely nothing to worry about when it comes to using the deferred tax benefits. Bears could cry all they want but for Tesla to claim the deferred tax benefits, they would need to show their numbers to an auditor to prove that Q1 and ongoing will be GAAP profitable.

Now if they don't give profitability guidance for Q1 and say something like it'll be close and yet they still realize the deferred tax benefits, then you would hear a lot of noise about accounting tricks/fraud. I would have to believe that Zach/Tesla are aware enough to not use any deferred tax benefits unless they were 100% confident in Q1 profitable(and by a nice margin, not like we will be profitable by 10 million GAAP) and future quarters.

To add on to my own comment. One thing that is a wild card is that Tesla won't disclose the terms of the FCA deal and how much they'll be getting quarterly from those payments.....BUT...….they would probably disclose that privately to the auditor when/if filing for the deferred tax payment. I still think that it would be prudent for them to give a range for profitability for Q1 and ongoing quarters. The range could be pretty wide, just as long as the base line guidance is comfortably above break even....let's say 50 million GAAP profits.

So from the outside, it could seem like Q1 profits might be iffy for whatever reason, but internally Tesla could be certain that they'll be profitable based on the FCA payments and privately show that to the auditor who would sign off on the deferred tax release.

 

[Dylan]

Reading about Lincoln's and Rivian's agreement for Lincoln to build on top of the skateboard platform that Rivian will supply makes me cringe in a way. I hope that Tesla won't go that route. Imo they are going to face a ton of integration issues and it will probably take a lot of energy from Rivian also to get that sorted. Further, I would think that it will hold Rivian back in innovation pace because it will make them less flexible to implement changes.

In that regard vertical integration also makes much more sense to me.

 

[wipster]

Oh baby! Maybe 600 before earnings release?

 

[SOULPEDL]

Don't look....

 

[Nocturnal]

Reading about Lincoln's and Rivian's agreement for Lincoln to build on top of the skateboard platform that Rivian will supply makes me cringe in a way. I hope that Tesla won't go that route. Imo they are going to face a ton of integration issues and it will probably take a lot of energy from Rivian also to get that sorted. Further, I would think that it will hold Rivian back in innovation pace because it will make them less flexible to implement changes.

In that regard vertical integration also makes much more sense to me.

Shared platform means compromises all around. Amazon wants X, Lincoln want's Y, Rivian prefers Z.

 

[viridi]

Wow! Real fight to stop this from going though $580. Huge number of sell orders at $580.

 

[Zaxxon]

Electrek - 1.5 hours ago: https://ww.electrek.co/2020/01/29/tesla-model-y-canada-rumors-deliveries/

Excerpt:

A Tesla Model Y prototype was spotted in Toronto, feeding the rumors that Tesla might start deliveries in Canada.

Seems like just yesterday Electrek was telling us that Ys were spotted in Colorado, and that Tesla was therefore just in the middle of their test program. Must mean that deliveries are starting in Colorado.

 

[StealthP3D]

And after we brake them, we'll break. them.
... and smote their ruin upon the mountain side

Cheers!

I think he must have meant "bake" them.

 

[adiggs]

Tell me about trying to get stuff done this whole past week! I work (play) at home, and $TSLA has been my latest drug of choice. Meanwhile, I got a job interview??? The universe is funny sometimes.

By some stroke of luck, someone connected me up for a job interview because I made the statement at a party that I'm too old for anyone hiring (discrimination happens). My phone screen interview last night when super, so I said to my wife "Let's see how Wed goes first." It begs the questions, what do I really want to do now? Somehow, getting up early and going to work doesn't sit well anymore. Seems pointless after this run up, I have enough now.

We'll see...

They're going to have to really knock it out of the park at your job interview

 

[SOULPEDL]

Seems to follow the macros...