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

[keydiver]

You know their plan is to use StarLink to do global home planet defense. I mean, against aliens. He is Elon Musk, he thinks big.

It's one thing to send probes to Mars, but once Elon starts colonizing it might start a counterattack!

 

[Nocturnal]

Does anyone want to buy this $300 2/7 put I bought a while back to hedge against a drop? It might be worth something, you never know! lol

Adam Jonas giving NYE advice to Elon not to give up?! Does he not know anything about the guy? like he needed Adam's advice. Maybe he thinks he spurred Elon to continue on and hang in there.

Breaking News for CNBC -- Record High for NASDQ - Tesla Shares Surger Higher.

Adam just talked about his Starlink question...still doesn't think it's crazy. He did acknowledge that people were laughing at him.

Finished up the interview with Adam saying that it's the end of the ICE age!!!!

I don't think it was a crazy question, maybe even a decent one, but it's such a small potatoes thing. Yeah, it would be great for Teslas to have satellite based communications for areas with bad cell reception but that's like #2458 on the list of things Tesla should deploy. And after Elon brushed it off he kept at it.

I honestly think Jonas wasn't prepared and just remembered an idea he had and was trying to sound like he was deep into the technical stuff.

 

[SMAlset]

Tesla coverage on CNBC now. Talking about Cathie Wood and how he thought this was theater of the absurd and maybe the jokes on him. Playing Ron Baron vid now.

 

[Fact Checking]

It’s such an Elon move. He hates the shorts

I don't think Elon is hating the shorts anymore, according Ihor the shorts have so far invested about 21 billion dollars in Tesla since the IPO, by transferring those funds to Tesla investors gradually, free of charge. That was rather altruistic of them, although we could have done without the accompanying FUD.

 

[TradingInvest]

When VW was in the squeeze, did people _know_ it was a squeeze or think it was a case of valuation becoming what bulls though was right? VW was a unique situation in regards to shorting and float available. TSLA doesn't have that, so I'd think this is likely to stick, though some squeezing effect would seem a likely component in this rise and thus some drop at some point would be likely, though god knows at what price and timeline.

There is a lot of misunderstanding about VW squeeze. That squeeze actually happened in a span of several years. It started at a fair value, slowly rise for a few years (Porsche family accumulating), then a bigger rise, then a major pullback, then the epic squeeze to one trillion dollar market cap. The whole process drove the stock 20 times above it's intrinsic value. That's a real short squeeze.

Tesla today is still undervalued. Let's say $1k is fair value, we repeat a short squeeze comparable to the same scale as VW squeeze. Assume Tesla's intrinsic value doubles in 5 years, then we have to reach $40,000 by 2025 to match the VW scale. (squeezed to 20 times of intrinsic value).

If Tesla's intrinsic value reaches $5k by 2025, which is likely to happen, then we have to reach $100,000 a share by 2025 to match the magnitude of VW squeeze.

 

[humbaba]

wouldn't borrowing costs for shorts at least go up if shares aren't available?

There are plenty of shares to short, but that isn't the same as enough shares to cover.

If you just naively look at the float, sure, there's plenty of shares. But that doesn't tell you how many holders are actually willing to sell at this price point.

If you just look at the borrow fee that only tells you how expensive a new short position is to open. While that is somewhat informative as to the risk of opening a position it really doesn't tell you that much. A high fee could happen as the company sinks while every bottom feeder is trying to jump in.

With Tesla it seems likely that anyone foolish enough to initiate a short position can do so (and be quickly underwater if they don't grab a lucky dip) but getting out of a large position isn't so easy. I think the official short data will (eventually) show that the number of shares shorted continued to decline, but not as fast as the stock price has gone up, resulting in a larger value at risk.

One other thing to consider is that because initiating a short is easy a short covering may be buying from a new short which would mean that there was no net covering, just a transfer of risk.

 

[TheTalkingMule]

Scott Wapner on CNBC is about to have a coronary.

 

[Rockster]

The fact that they couldn't recognize this until now tells me they are not the sharpest tools in the shed and their analysis is worthless.

I said something like that a bunch of pages ago. Those just now saying that Tesla is a promising player are not insightful. They're just seeing which way the wind is blowing and jumping in front of it with an opinion. Those who said the same thing when TSLA SP was $150 are the insightful ones.

 

[jbcarioca]

@Unknown's question had me searching for an answer to the question if once you sold shares in the current tax year that resulted in a substantial gain (say a few hundred thousand +) would IRS expect you to make payments in the remaining quarters of that year based on the likely cap gain tax you will have to pay come the following April? If you knew at date of sale that at your Cap Gains tax rate (15 or 20%) your Cap Gain tax due would be $50K, would they penalize you if you did not send them one or more quarterly payments of $12,500? I can imagine they might. But since you don't really know what other investment gains or losses you might incur after the highly profitable sale, I could also see them not wanting to get into the potential complexity of requiring estimated taxes for capital gains. Anyone know if IRS does expect estimated payments for cap gains?

IME, if all other tax payments have been made as required, they do not expect coverage of capital or ST gains during a tax year. I have never had any question about any gains/losses I have had. However, in my very long US tax filing history I have never been late in filing (luckily for me foreign residents do have automatic extensions.) nor have I had paperwork errors. Since my foreign-source activities have generated quite large piles of documents I have been regularly surprised at having never had a disallowance of anything upon audit. Sadly I have had many audits from a host of jurisdictions.

BTW, in some tax filing jurisdictions the exact timing of income/expenses during a year does have significant importance. Thus, check on your US Local/State tax issues as well as Federal. Of course for non-residents even US-based events can have timing consequences even if the US ones do not.

I hope nobody needs to go through the multi-country agony. Personally I am down to only two countries. Glorious progress, in my opinion.

 

[mejojo]

Lottery ticket bought yesterday...

 

[TradingInvest]

wouldn't borrowing costs for shorts at least go up if shares aren't available?

Seems to me the borrowing interest rate will not rise significantly. There are too many potential lenders. Shorts' pain comes from rising stock price. They get margin calls.

 

[Nocturnal]

I don't think Elon is hating the shorts anymore, according Ihor the shorts have so far invested about 21 billion dollars in Tesla since the IPO, by transferring those funds to Tesla investors gradually, free of charge. That was rather altruistic of them, although we could have done without the accompanying FUD.

If I assume that the other side of my calls were shorts, then they have now paid off my Model 3 and paid for my CT and cyberATV. To say nothing of the extra shares I was able to accumulate as they pushed the stock price itself down. I bought back in big time in August 2018 and if the stock had stayed at 400 or gone higher I wouldn't have added nearly as many shares.

 

[jerry33]

If Tesla's intrinsic value reaches $5k by 2025, which is likely to happen, then we have to reach $100,000 a share by 2025 to match the magnitude of VW squeeze.

Now there's a good selling price.

 

[mikevbf]

To understand the stock valuation it's a simple question, If we are headed to 10 or 20 million BEVs in 5-10 years, which is a higher risk on execution to there: Tesla or Toyota?

There are more complicated questions around energy and autonomy, but the electric cars one is simple.

 

[sundaymorning]

Elon Musk just passed Charles Koch on the Forbes "Real Time Billionaires" list:

Real Time Billionaires

I suspect this understates Elon's wealth though because it uses year-old market cap figures for SpaceX.

my prediction is that Elon will be able to buy out the entire Koch Borther stake by end of week at this rate.

 

[Fact Checking]

wouldn't borrowing costs for shorts at least go up if shares aren't available?

There are two very different "pools of shares" that shouldn't be confused:

• The pool of shares available for lending. There's plenty of this and there's no danger of this being exhausted anytime soon. A share lent out is still owned by the original owner.
  
• The pool of shares available for buying. There's a limited supply here, and exhausting the supply at a given price level drives up the price. A share sold is not owned by the original owner anymore.

The arguments here that point out a probable narrowing of TSLA's float suggest that shares available to buy are running out at various price levels - which magnifies and perpetuates any short squeeze to the upside. This has no effect on shares available to borrow.

 

[SageBrush]

The way it works (at least in my situation) is if I owe, let’s say, 8k in federal taxes this year, then IRS assumes I will owe that much next year. So they take that 8k and break it into 4, so I have to pay 2k each quarter towards next year. If I end up paying over at the end of year, great, I get a refund and no quarterly payments for following years taxes. If not enough, then pay up some more and that balance again gets broken into 4. This becomes an alternating game year after year. Weird, but it’s to make sure that the IRA gets their share, simply based on estimates and the fact that you won’t get stuck with a large tax bill, and be hesitant to pay up.

Excellent post.
It means you should pay according to last year's schedule unless you have a really solid reason to think this year will be less. I tend to to follow last year for at least the first 6 months of the current year and then consider paying less for the remainder of the year if substantial negative changes have occurred.

 

[andrewt3000]

I am holding my shares.... I bought in 2013... it had a huge run. It traded sideways around $200 for 6 years. I accept that this may be the best price for a few years, but in 5 or 10 years. I think Tesla will be worth a lot more.

If FSD comes to fruition (which I think it will within 10 years), they won't be selling Tesla semis, they will be a monopoly that puts all the truck and rail companies out of business. They will bury Uber and Lyft along with all the auto companies, and energy companies, and the auto insurance companies.

I am selling my berkshire stock. They are losers as Tesla wins. Geico, McLane, BNSF, BYD, and the energy companies... all dead in the water.

 

[Nocturnal]

That's my situation right there. I have some Jan '21 $150 calls purchased at various times throughout the first half of 2019. Just waiting for them to become long-term gains before selling (and buying as many shares as possible with the proceeds, i.e. I don't want to sell out completely, just deleverage somewhat).

The tax difference doesn't factor too much into my decisions personally. I sold my Jan 2021 call today as I'm pretty sure I'll be able to buy them back again (or similar) for less than I sold them for today. If not then I'll sleep on the pile of money from my long shares.

I am holding my shares.... I bought in 2013... it had a huge run. It traded sideways around $200 for 6 years. I accept that this may be the best price for a few years, but in 5 or 10 years. I think Tesla will be worth a lot more.

If FSD comes to fruition (which I think it will within 10 years), they won't be selling Tesla semis, they will be a monopoly that puts all the truck and rail companies out of business. They will bury Uber and Lyft along with all the auto companies, and energy companies, and the auto insurance companies.

I am selling my berkshire stock. They are losers as Tesla wins. Geico, McLane, BNSF, BYD, and the energy companies... all dead in the water.

Absolutely. FSD is going to disrupt for than we can imagine. I did the math and autonomous EV semis will be within spitting distance of rail freight, but with 2 day timing instead of 2 weeks.

Domestic airlines (at least short hauls) will also be negatively impacted.

Green energy is the next internet, along with the massive impacts to our lives and economy (that is still occurring) and I believe FSD is just as big. ​

 

[StealthP3D]

I really envy the folks who could "tap out" and basically be set with a life-changing amount of wealth. Or maybe I don't. That has got to be very tempting.

You can never really "tap out" because your wealth has to be in something. Unproductive cash is one of the least safe places as it would just whittle down to nothing over the years.

If you sell your TSLA you have to ask yourself what would you invest it in then? A bond fund with 2% returns?