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

[kelly]

With some shame I have to admit I temporarily got shaken out. So yeah, I'm a weak long now. I rode it all the way down from 350 to 178 and kept buying. The lowering of my average price insulated me against the drop last spring.

But the last 20 hours the manipulations, the huge movements and the amounts at stake were getting too much for me. So I cashed out at 760 this morning with a profit op $520k (yep, I know I could have chosen a much better moment as that is near the low).

I will look if I can get back in over the next weeks when things settle down, because I fully believe in the long term prospects of this company. Maybe I'll start writing puts and buying long-term calls, but I first need to switch provider to be able to do that as my current provider does't offer options. Sorry guys for participating in this drop.

Weak Long! Branded!

 

[Unpilot]

When the idiot host asked, in response to her comment that Tesla's market share had increased from 17 to 18% globally in the face of several "Tesla killers" being released, "is that ALL vehicles or just electric?", I wish she would have said, "really? Are you THAT damn clueless?".

Oh yea, Tesla owns 18% of the world auto market. If so, discussing $7000 a share would be a discussion about it falling by by 80%.

What an idiot.

I would pay someone to blip out those talking head idiot's so I cold just listen to Cathie.

 

[Dwdnjck]

I sold enough of the shares,yesterday, that I had accumulated over the years, that I am now playing with “house money”.
I am amazed at how calm I am about today’s paper loss.

 

[rsm287]

Right, he was explaining the price movement and how the street did it. He remains solid in the TSLA corner as I heard it. He said some reassuring things about the price returning to upward movement but gave no time frames. I took it as a "hang in there" comment backed up by his explanation of how the street had over pumped the stock in order to kick out the support a few hours later.

Really need to hear it again.

Here's the segment where Cramer talked about the recent drop if you want to hear it again:

 

[KarenRei]

I sold enough of the shares,yesterday, that I had accumulated over the years, that I am now playing with “house money”.
I am amazed at how calm I am about today’s paper loss.

I know, right? On paper I'm down something like $300-$350k since yesterday's peak and my reaction is just... "meh" Deleverage on the way up, leverage on the way down. It's not like I wasn't taking profit out as shares and a bit of diversification during that high period - I took out something like $120-140k or so yesterday via rolling spreads. It's just been crazy during the rise... I'd roll, and the new spreads would regain the value I took out in just a couple days.

 

[lascavarian]

Here's the segment where Cramer talked about the recent drop if you want to hear it again:

Thanks for posting this. I forgot about the dismissal of the Tilray or bitcoin comparison. Tesla is the real deal he says without predicting when it will revisit the 900s.

 

[Rammstein]

Actually, there is a very good reason why that might not work for most people.

If your TSLA shares were purchased less than 12 months previous they are short-term holdings and get taxed at whatever tax bracket you are in. For many here, that would be 37% (the other common rates are 35%, 32% and 24%).

Let's say you could have sold shares purchased in May 2019 for $240 for $950 yesterday and you would be in the 35% tax bracket. You can't really use all of your gains to buy back today at a lower price because you need to withhold $248.50 per share sold to cover the capital gains tax that will be due for 2020 taxes. You would need to be able to buy back in at $701.50 in order to get the same number of shares after paying tax on your profits.

If you were able to do this (sell at $950 and buy the same number of shares back at $701.50), you would be in exactly the same financial position as had you simply held with one small difference. You would have raised your cost basis from $240/share to $701.50/share. That's the only benefit you would realize. Furthermore, this is a benefit that doesn't compound. In fact, if you eventually sell the shares at $6000 in your retirement, when you are taxed at a lower rate, the savings will seem almost insignificant.

Do Americans not have tax free savings accounts?

 

[Foghat]

It is interesting Ark Invest doesn't mention solar and energy in their interviews. I wonder what they would forecast for when home storage and solar are pared across millions of homes. It is similar to the Robotaxi network, but seemingly far more revenue in the end when you understand demand response and aggregated services from the network. Solarcity already had aggregated services in their contracts years ago, so Tesla is very deep into developing this. They have pilot programs that have been going on for years. If there ever was an area most analysts covering Tesla don't have a clue on, it is the energy component or utility industry component.

Once Tesla is commonplace in the home, it could be a problem for many other such as Apple, Google, etc that want to dominate in the connected home. Tesla not coming through the speakers or the thermostat like those guys, but through your utility, your kWh. The kWh, then your internet service, your internet service then your operating system, your operating system and all your smart devices, and the rest is history. Tesla energy services market transactions (reminiscent to X.com business arena) could become a currency unto itself. That currency could be traded globally for Tesla run energy services, for Robotaxi services, for Tesla Semi operations... it is a massive transformation in economic activity as we know it.

It started with seeds, then gold, then oil... now Tesla kwhs?

Ark was right about convergence, but its not just around transport around which this convergence is happening, making this a whole new play ground few thought possible.

 

[tinm]

Tesla broke ground and started work on Giga Texas, Giga New Mexico(?) and Giga Nevada during final site selection.
I never heard if they sold back the land for the 2 unselected sites or not.

Your Daily Amnesia Antidote from your friendly neighborhood Fiddler.

Um, fact-check: I am not aware there was ever anything close to any groundbreaking for a GigaFactory in NM. The oil-and-gas governor and her incompetent team of that era couldn’t have broken ground if they’d fired from directly overhead a volley of bunker busters straight into the dirt. New Mexico was never a serious contender for GF1.

 

[TSLA Pilot]

Yesterday someone questioned my loyalty to Baron's advice by selling out all my TSLA in a Roth IRA and asked if it was prudent. Sale price $906. I wanted today to buy back at $700. Missed the boat and placed a limit order which was filled @ $720. Made 2.66 times my pension per month in one day. Was it prudent? I cannot judge my actions.

Well played.

I thought you were out for good, based on your financial adviser's suggestions; glad you're back in.

 

[JayM3]

It is interesting Ark Invest doesn't mention solar and energy in their interviews. I wonder what they would forecast for when home storage and solar are pared across millions of homes.

I too have wondered when they'll start to model this in.

 

[MTL_HABS1909]

Slightly OT, but is anyone else not able to vote in Elon’s Giga Texas tweet? I don’t even see the option....

 

[hoang51]

I can confirm this. Couldn't log in for most of the day. Folks, if you don't want to be locked out of your account, don't use Merrill Edge. I'm done with them. Stock tanking? Need to sell in a hurry? Chances are you'll be out of luck, to the tune of "We are sorry, due to above-average traffic, our website is experiencing technical difficulties. Enjoy your losses! Thank you for being a valued Merrill Edge customer."

I know it was a minor inconvenience for me, but sorry that you had worse. Good thing I set up a stop loss in the event I wasn't around to act quickly with the stock.

 

[SoGA Fan Club]

I would pay someone to blip out those talking head idiot's so I cold just listen to Cathie.

How much? I can be bought!

 

[Jack6591]

It is interesting Ark Invest doesn't mention solar and energy in their interviews. I wonder want they would forecast for when home storage and solar are pared across millions of homes. It is similar to the Robotaxi network, but seemingly far more revenue in the end when you understand demand response and aggregated services from the network. Solarcity already had it in their contracts years ago, so Tesla is very deep into developing this. They have pilot programs that have been going on for years. If there ever was an area most analysts covering Tesla don't have a clue on, it is the energy component or utility industry component.

Once Tesla is commonplace in the home, it could be a problem for many other such as Apple, Google, etc that want to dominate in the connected home. Tesla not coming through the speakers or the thermostat like those guys, but through your utility, your kWh. The kWh, then your internet service, your internet service then your operating system, your operating system and all your smart devices, and the rest is history. Tesla energy services market transactions could become a currency unto itself. That currency could be traded globally for Tesla run energy services, for Robotaxi services, for Tesla Semi operations... it is a massive transformation in economic activity as we know it.

It started with seeds, then gold, then oil... now Tesla kwhs?

Ark was right about convergence, but its not just around transport this convergence is happening which makes this a whole new play ground few thought possible.

I’ve worked as a solar inspector/electrical inspector for years. I’ve been employed in the electrical utility industry building and serving power generation, transmission, and distribution facilities for decades. I only mention this to emphasize my blue collar, nuts and bolts, boots on the ground view of the industry.

The bureaucracy that has metastasized the utility industry will be overwhelmed by the convergence of battery cost reductions married to solar power. This combination will capture large swaths of utility cash flows.

The utility industry is oblivious to the threat—incapable and unwilling to adapt—and despised by their customer base.

In the coming months I will retire from one the largest electrical utility in the world; my retirement hedged by ownership in Tesla.

 

[Larrygoldberg]

Answering my own question, here are my calculations (hopefully I guessed the columns correctly; they weren't labeled in his incorrectly titled "Why I'm Now Shorting Tesla Stock" video):

Description Quantity Basis/sh Total basis Price/sh Total Value Gain %
Feb 21 '20 $600 Call 300 $1.9498 $58,494 $294.35 $8,830,500 14996%
Feb 21 '20 $300 Put 70 $2.7900 $19,530 $0.44 $3,080 -84%
Feb 21 '20 $350 Put 30 $5.9640 $17,892 $0.70 $2,100 -88%
Mar 20 '20 $600 Call 40 $2.7485 $10,994 $302.35 $1,209,400 10901%
Totals $106,910 $10,045,080 9296%

So if Jack were still holding those options, he'd be up ~93X on them and they'd be worth about $10M. Sadly I just noticed there was another video about a week after the first, which I haven't watched yet, but the comments indicate he had sold the Calls. Still at a healthy profit, but nowhere near $10M. I hope he put the proceeds back into TSLA shares at least!

Edit: Damnit I have the columns nicely aligned in the editor, but the spaces all collapse into one when you view it... I don't know how to fix that, so you'll just have to puzzle it out.

To answer your question, he had just posted a YouTube video on the subject, and he made a profit of $2m as of yesterday (he was still holding 1 contract out of all the contacts he bought at the time of the video, so it was pretty much over. Not shabby. I didn't do as well, but a good percentage of that. Slightly different strategy, but it worked.

 

[Foghat]

I too have wondered when they'll start to model this in.

Tesla is going to be using every single cell they produce for many many year to come. If we a talking about millions or more homes as well as millions or more vehicles, Tesla is going to be supply constrained for a decade or more. All I can say is Tesla will be a vortex of gigafactory construction sites and any/all producers that will supply them.

It is very hard for me too see any competitor getting any cells at scale unless they spend much of their capital to build their own gigafactories or get their assets absorbed by Tesla itself. At the rate we see gigafactories going up, this isn't going to be pretty for the traditional manufactures and parts business because they can't escape the inertia of the ICE ecosystem and at the same time invest billions every year in their own gigafactories. This implosion may lead to further desperation to the point Tesla gets targeted for more than walstreet financial warfare to slow the death spiral down. Already seeing analysts on tv talking about politicians/governments stepping in to save traditional industry "workers" from Tesla's rise.

 

[FrankSG]

Today's price moves increase my confidence in this interpretation.
Effective free float of investors willing to trade their shares has got far too small (both due to old investors holding very high price targets and with new long term investors jumping on board the clean energy transition), while the net delta exposure of the options market has got far too big. So prices moves in either direction rapidly spiral, amplified by the delta hedging change (both from higher/lower delta of each option as price rises/falls and with leveraged investors increasing exposure or taking profits in the options market and market maker's dumping their corresponding delta hedge shares).
This is again all amplified by a trend of buying options on Monday and taking profits through the week (particularly on Thursday and Friday ahead of weekly maturities). More investors have caught on to this trend so it becomes equivalent to a self reinforcing investor buy/sell technical signal.

If this is all the case, very high volatility is likely to continue.
And if investors took enough profit on Monday and Tuesday, they can boost the stock again significantly on Monday by buying options en masse again.

I understand how delta hedging amplifies both upward and downward movements. I also understand how a contracting float amplifies upward movements.

I don't understand though how a contracting float could amplify downward movements. Shouldn't a high interest in the stock and contracting float @ $900, mean that (all else being equal) there is even more interest in the stock @ $800 and $750, so it would dampen downward movements, until a price is reached where some portion of the "long-holders" in the float are willing to sell again and expand the float?

 

[Dutchie]

Last night I told my wife that - if we have another day like the past two days - I was thinking of selling just to cash in. My wife was a littl hesitant.
Later we saw the whole Ron Barron interview - what a nice down-to-earth grandad is that! My wife said the he never sells, why should we? So ok, we continue too hold. Today was a bad day to sell anyway with stock going down so fast.

 

[StealthP3D]

I sold enough of the shares,yesterday, that I had accumulated over the years, that I am now playing with “house money”.
I am amazed at how calm I am about today’s paper loss.

There is no difference between house money and your money.

In fact, every dollar I've ever put into my brokerage account I treated as "house money" as well as my money, there really is zero difference and I recommend thinking about it this way. Because I never put a dollar in that I wasn't prepared to lose. And I never made a bet that I didn't think was a good bet. I don't care whether it's house money or my money, I don't want to do stupid things with it. I also don't want to treat it like it's too precious to risk.

But I haven't added any funds to it for over 25 years. And I've taken out many times more than I ever put in. It's like the big piggy bank that just keeps on giving.