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

[KarenRei]

Hmmm
I have some March 410s and September $425s which are definitely deep ITMs. Got them back in October/November last year. I was planning to hold closer to expiration. Is it better to sell now and roll over to something else? Or maybe just buy stock and hold. Call options have become so incredibly expensive. I feel like buying stock is better- at least it doesn’t expire.
Tax is not a concern, it is an IRA account.

I'd personally roll. You're running out of delta upside on them; you can't go higher than 1. If you want to reduce leverage, you can trade each one for a call at a higher strike and pocket the profit as shares. I do that a lot.

Just got the information an hour ago from a well known automaker that does not get enough battery cells/packs for the production hence they had to go down in output and the line is even partly standing while the supplier ask for a lot more money to restart delivery.

I'm going to wager a wild guess here that the supplier's name begins with an L, ends with a G, is only 2 letters long, and is LG.

 

[Prunesquallor]

Like if I said Mark My Islands, you’d be like -

I understand cats do that. Dogs, too.

 

[dakh]

Autonomy Investor day was really cool for nerds like me (us) and it gave us excellent insight into how Tesla's going to do the impossible. For WS analyst? Way over their head! Also, Autonomy day's most concrete, immediate "product" was HW3 computer, which, again, amazing milestone in AI HW development and will be taught in school a decade from now as a turning point in technology, but not material for WS analyst. 99% of the world still considers FSD a pie in the sky thing and Tesla's target dates were 1-2 years out anyway (hence no immediate bottom line impact).

Now, battery day on the other hand... oh boy.

Unless they come out with nothing but aspirational future tech years down the road, this has much more potential for SP movement. As I said earlier, releasing info on miracle battery tech a year out is a dangerous game that could osborne current products, just like upcoming EVs are osborning (some) ICE sales.

If however they announce, like with HW3, that some of this tech is already in production and this has tangible benefits, it would leapfrog Tesla even further ahead of the competition, in fact osborning some of their announced, but yet unreleased products. This is tangible, major news for analysts with financial benefits they can plug into their models. These benefits could include: SW update unlocks more range on cars produced since e.g. March 1, significantly higher margin on cars in production, less capex needed for ramping battery production capacity, better cell longevity and charging rate, less environmental impact, etc etc. Who knows what they've cooked up.

Yea I hope you're right on what happens during battery investor day but I have my doubts and will play it accordingly.

I think they can introduce new battery tech without too much angst or demand delay. If the production lines are flexible between 3 and Y, there are ways to play this, for example

Step 1:
- All car stuff is as is, Tesla Energy products start shipping with new battery tech from a new production line at GF1

Step 2:

- S, X and 3 remain on Panasonic cells in US
- 3, for now, remains on Panasonic cells in China
- Y in US is on Panasonic cells too
- Y in China ships using new batteries from day 0, maybe from batteries originating in GF1 (can be China too but less likely)


Step 3:
- Use new batteries for Semi
- Y in US gets switched over to new batteries (made in GF1). Because of production line flexibility, they can adjust the mix towards Model Y and simply make less M3's with the same overall output if M3 demand drops

Step 4:
- GF Berlin ships Y and 3 using new battery tech from day 0
- China 3 switches to new batteries

Step 5:
US 3 switches to new batteries


As you can see this can be played in many different ways but overall I think it can be done without much demand disruption.

 

[HG Wells]

Don’t feel bad. How can you take anyone serious who’s so pompous as to say, Mark My Worlds? Like if I said Mark My Islands, you’d be like -

There are a number of dog owners on this site. They are familiar with marking things.

 

[The Martian]

It is!
View attachment 506469

It is a chair!

 

[Krugerrand]

I'm going to wager a wild guess here that the supplier's name begins with an L, ends with a G, is only 2 letters long, and is LG.

Ah, come on! Give us at least a little hint. I promise it won’t leave this forum.

 

[MC3OZ]

The other interesting comment was Tesla a limited by to pool of engineering talent...
Tesla has 10+ years of R&D on EVs and batteries, established R&D centres with experienced staff.
They will be expanding in China and Germany tapping into more engineering talent...
My question is what does this mean for competitors?
They can and probably will try poaching Tesla's talent, but for more junior staff it takes a considerable bump in salary to justify relocation...
If the work like balance at Tesla gets a but less crazy, it is an exciting place to work...
It isn't just batteries other car makers need, they need engineering talent, machinery and all that needs money.....
So the growth of Tesla might be slightly constrained by a lack engineering talent, but for those further back in the pack, engineering talent is just another thing they don't have...

I'm happy for Tesla to keep piling up the cash and paying down some debt as that is good insurance against a recession...
They are still looking to grow at a fairly aggressive rate, and there is a limit to how much they can do at once.

Once GF Shanghai and GF Berlin are full operational, Tesla will have more money and more engineering talent at their disposal.,
They may be able to grow even faster at that time as additional car/battery factories may simply be largely replicating existing factories using proven processes.

 

[CanadaEV]

Yea, and the investment related question is, how and when will the news be priced in? The two extremes are: it is only priced in when new battery stuff starts showing up on the balance sheet, or it gets priced in immediately on news release. I think trying to predict that, especially given the previous history of stock moves on release of similar news, is a losing proposition. So I'm thinking, as boring and un-exciting that is, simply staying long and not trying to time when exactly is this priced in might be the best strategy.

I agree that is the smart strategy.

However, it did work for some people who had the resources to use calls in addition to their long term holdings, even after the initial run-up.

As for the timing, it's beginning to look like the truth about Tesla is getting more realistic attention. It could be this is happening more in places where media is not dominated by fossil fuel and legacy auto interests the way it has been in the US , i.e. in China and now perhaps a little in Germany. Recognition of the importance of Tesla's battery progress could get more immediate attention now than previous innovations.

 

[Krugerrand]

My question is what does this mean for competitors?

Adding: On a positive note, because...there’s cowbells where they’re going.

 

[Cherry Wine]

Excellent summary.

I only wish there were some knowledgeable TMC members present - there were so many obvious followup questions to ask after some of Elon’s comments.

Elon focused a lot on how stupid it is to build cars in USA and shipping them to Europe and China, so one obvious followup is will the premium models eventually also see localized production in China and Europe?

(One note: Honda is one car maker that actually does make aircraft, The Honda Jet, but it’s tiny compared to its auto operations. I think Musk may start an independent company to make planes, by the way he was talking, but not any time soon.)

Could you imagine a roundtable between Elon and some of our resident tech experts here? I would legitimately pay money to see that.

 

[MC3OZ]

Yea I hope you're right on what happens during battery investor day but I have my doubts and will play it accordingly.

I think they can introduce new battery tech without too much angst or demand delay. If the production lines are flexible between 3 and Y, there are ways to play this, for example

My hunch is similar, new battery tech phases in in steps, but I have different steps....

Step 1 - Plaid Model S/X, Roadster
Step 2- All Model S/X
Step 3 - Cybertruck
Step 4 - Performance Model 3/Y
Step 5 - Semi
Step 6- All Model 3/Y - LR, then MR. the SR....

So for step 6 they may reintroduce MR, just to help the phase in...

Shanghai and Berlin more or less sync with Fremont on steps 4 and 6.

Tesla energy cells continue to be made by Panasonic for a few more years...

 

[space_s3x]

I know DaveT is against taking profits too soon but he should sell 1 stock and buy some shirts. (jk, love his channel)

 

[Prunesquallor]

I know DaveT is against taking profits too soon but he should sell 1 stock and buy some shirts. (jk, love his channel)

View attachment 506484

Hey, he might be using the Einstein technique and have a closet full of those.

 

[CanadaEV]

It is a chair!

...and now we know why chairs are under-appreciated

 

[Zaxxon]

Solving the Money Problem on the impact potential of Jim Cramer stating that the fossil fuel era is in its death knell this morning.

Seems like one (small but clear) sign that things really are changing in terms of investor sentiment.

 

[Spksmp]

Yes, I think your observations are right on.

So far I haven't seen this specific wording referenced, (I've probably missed others referencing it), but this, almost throw away comment from Musk during the earnings call, seems to encapsulate what he will be saying in April, and if so, it can't help but move the market:

"So tentatively sort of in the April timeframe, we will do a Battery Day and kind of go through what the challenges are, how do you get from here to, I don't know a couple of thousand gigawatt hours a year or something."

The part that really sticks out to me is the "I don't know ..... or something"

So casual, like "you know, just a couple thousand GWh a year, no biggy."

We know in the past he has said he wants 2TWh/year by 2030. Now he says that battery day will not just blow people's minds, but it already blows his mind too. Announcing a path to 2TWh capacity by 2030 wouldn't blow my mind. I'm expecting this. And it certainly wouldn't be blowing Elon's mind. So what is? I think it's clear:

We know Maxwell tech is supposed to be 16x production density increase. Let's be conservative and go with 10x. So in the same space GF1 does ~35GWh now, they could do ~350GWh. Now add in similar sized production at the Cell Factories in GF3/4, and we could have ~1TWh/year. As soon as GF4 is up and running. Not by 2030, by next year. This would blow my mind. The only limiting factor would be raw material supply.

Do they need this many cells now? Sure they do. Semi will require a huge amount if they want to produce it at any sort of volume. Also, assuming these cells are 20% cheaper, Powerwalls and Megapacks would sell like hot cakes. Fossil fuel peaker plants would be replaced everywhere. Any extra, they would sell to other automakers, they sure need them, and this aligns with Elon's eventual goal.

By 2030, the world will need dozen's if not hundreds of TWh's of capacity. A couple TWh's is nothing. I believe battery day will basically change the course of history. A shot through the heart of ICE and FF. With this level of production capacity, the change to a sustainable future will be immediate.

Or, am I dreaming too big? What else would "blow people's minds"?

Whatever it is, I'm expecting the market to react big in April.

 

[Curt Renz]

I know DaveT is against taking profits too soon but he should sell 1 stock and buy some shirts. (jk, love his channel)

View attachment 506484

And a jacket & tie like I proudly wore.

Go to 6:04 minute mark:

 

[steve3]

Interestingly today, my old bookmarks resurrected this prescient post from @DaveT six years ago on January 6, 2014 which he titled
2019: The long horizon approach to TSLA investing

In it, among other things he makes this 2019 prediction:
“So conservatively if Tesla can sell 700k cars in 2019 then the stock price will likely be at least $630/share.”

Articles/megaposts by DaveT

Great job Dave!
Now...what’re your 2025 predictions??

 

[Nurkbonis]

Ark posted its updated projection.

Tesla Price Target: Tesla's Potential Trajectory During the Next Five Years

2024 "expected value" - $7k. Bear case: $1,500. Bull case: $15,000.

 

[MC3OZ]

By 2030, the world will need dozen's if not hundreds of TWh's of capacity. A couple TWh's is nothing

20 Million cars .... 35 GWh x 2 X 20 = 2,800

A but some portion would be smaller cars with smaller batteries...

When we need to add in Tesla energy ... my guess around 500 GWh per year...

2 TWh is a good initial target for Tesla...