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

[Causalien]

I have my own business that manages projects in over 60 countries around the world. Whenever we have a project that includes China, I am very happy, in Latin American, I start to sweat. It's one of the hardest regions in the world to do business in. Look at economic growth in China vs. Latin America over the past 20 years...

Saying that, I really appreciate Karen's informative post and I will gladly be wrong, but at the end of the day this is a discussion forum where we share opinions so that we can learn something, and have a good time doing so

We had a distributor in Brazil before the olympics. I think there were 3 big events happening there bunched together within a span of 2 years.

Boy, were they throwing money at everything. We did a lot of analysis on the stories they told us while we exchanged technical expertise. We concluded that there's probably a lot of bribery and corruption happening and the good times are enabled by such corruption and the confluence of major events. So we decided to start divest our income from that country.

Year after the olympics, later I was tasked with establishing a branch in USA. Our Brazilian distributor, hearing that, decided to enter the USA market to compete with us as well. The brazilian government even invested 20mil in startup capital. There I was, shell shocked by the amount of backing they have while I had to bootstrap it Silicon Valley style.

Fast forward to the end result, everything came crushing down for them. They didn't get a foothold in USA and our revenue from that country decreased to almost zero.

Just to say, our analysis was correct back then. Might not be true now but they still got the demographics to their favor as they have a lot of young adults and I've been tempted to invest in them based off of just that. However, the corruption and bribery is real. You can't get anywhere without that.

 

[Bobfitz1]

The talking heads on TV always like to mockingly point out that Tesla was Arks largest holding. Cathie would typically say something like "Yes, Tesla is our strongest conviction holding.". They aren't mocking her now, they are insanely jealous and embarrassed. The lady knows what she is talking about.

"ARK’s thesis for the evolution of the market differs dramatically. Based on Wright’s Law, we forecast EV sales will be 37 million units, six-times higher than the forecasting agencies’ consensus estimate for 2024." - from ARK Big Ideas 2020 page 20.

I have great admiration and respect for Cathie Woods and her team of analysts covering Tesla. ARK clearly gets Tesla better than any fund management company I know. That said, I really wonder how ARK can be forecasting 37M global EV production by end of 2024 with the only explanation being Wright's Law. This forecast strikes me as unhinged. If Tesla manages to execute on their stated goal of maintaining 50% growth for the next five years they will produce 3 - 4 million BEV by 2024. That would be ~ 10% of ARKS forecast. But Tesla is years ahead of the western ICE OEMs on all key EV technologies, and they don't have the battery supply to grow their EV production anywhere near 50% a year. Am I missing facts that could make this a supportable forecast?

While Wright's Law seems very valid to ARKs analysis of how Tesla will be able to continue reducing battery and EV costs (ensuring they can sell as many EV as they can produce for many years to come), how can it support their 37M forecast when it will be several more years before the OEMs can raise their production enough to see major cost declines from Wright's Law needed to make their EVs cost less than comparable ICEV.

Seeing a gaping hole like this in ARK's wider EV analysis makes me wonder if this is a one off or indicates a wider weakness in their disruptive technology forecast methodology. Btw, the right most chart on page 25 of their 2020 Big Ideas document show the ARK forecast line reaching 7M EVs by 2024 rather than the 37M estimate they forecast on page 20. That seems like a pretty big consistency mistake for a key company document.

I'm not trying to diss ARK here, just pointing out what I see as a big forecasting miss by them, and curious to see if those better informed here also view it as one or not.

 

[rsm287]

Maybe unrelated as in cause/effect, but indirectly they're maybe riding the same wave - solar installs. This is also a really good sign that their solar micro-inverters are making some unexpected coin! It's the gold rush thing and they're selling the shovels.

Most of my 'solar' investments came right after watching Tony Seba's presentation on 'Clean Disruption: Energy & Transportation'. It convinced me that that the market for solar is going to be huge as it falls below cost parity in more and more markets. It also convinced me to considerably increase my stake in TSLA, even though it was already my largest holding by a long way!

 

[colettimj]

Funny that there is hardly any mention of the SP here. We just crossed 930 and not a peep. Are we all getting numb? This former 'weak long' sure is. Last time I got nervous at these heights and after the artificial drop I chickened out for 2 days. Now I feel at ease and believe I will shrug off any drop, even a large one. Eyes on the long term target ($5,000+). Or is it mid term?

As a TSLA long, I have always planned to hold for years. It was a test of faith at and below $200 and it became very hard for me to separate short-term TSLA gyrations from the long-term prospects of Tesla. Now that we're far above those prices I have no idea if today's price of TSLA is an accurate valuation of Tesla. But what I do know is that I haven't changed my long-term view of the company and it is now soooo much easier to watch the stock price move in both directions and go, "Meh".

 

[Causalien]

I suspect...both

The traditional playbook from China is to fork the factory by stealth opening another one somewhere else and hiring half of your workers away. This is after copying all the machines you have and stealing all the software. Sometimes they go further by having the worker fake declare machine parts wear and tear so they can move these parts to the forked factory.

Then they come to you and say, sell me your factory at half price, otherwise we will openly compete with you.

For domestic companies that are champions of people and high profile, the CCP will come by in secret one day and with some leverage they obtained on you (either your family member's dirty secret or some gov schenaningans) they force you to sign over the majority stake to CCP members. Jack Ma suffered this fate.

TSMC is one of the foreign corps that they haven't done this to yet. But TSMC are very familiar with their playbook and have not moved their most prized processes to China and retained them from Taiwan.

 

[jkirkwood001]

As we pass $940, I figured it's a good time to update the market cap 3-year view.

• $51 B to catch Toyota as the most valuable auto manufacturer in the world
• Over 5x the value of Ford
• Almost worth the German auto industry combined (TSLA = $173 B, VW + Daimler + BMW = $187 B)
• Every manufacturer except Toyota (+5.3% / yr) and VW (+3.7% / yr) has lost value over the last 3 years (e.g. Daimler -14.7% / yr)

 

[Muaddid]

My investment thesis is that S&P500 inclusion is coming this summer (possibly sooner) and the stock price should be higher than it is now once the big houses acquire their TSLA stock.

I've been trying to figure out what sort of increase we can expect from that... Right now TSLA at 170B$ would be 35th in the S&P 500 which means about 0.6% of the total S&P500 value.

There's about 4 trillions in ETF as of last november, a strong portion of which follows the S&P 500. Then there's all sorts of funds that aim to beat the S&P500... I haven't been able to pin a good estimate how much really follows it. But even if we assume 3trillion of assets follow the S&P... it doesn't actually seem like that would make a huge run up ?
I mean sure 0.6% of 3 trillions is 9billion$ but that's only a typical day's worth of exchange theses days !

I guess if the number is much bigger, that might be too much vs the float and then we'd see some crazy increase ?

I'm curious what your take on this is !

 

[Earlian]

That said, I really wonder how ARK can be forecasting 37M global EV production by end of 2024 with the only explanation being Wright's Law. This forecast strikes me as unhinged. If Tesla manages to execute on their stated goal of maintaining 50% growth for the next five years they will produce 3 - 4 million BEV by 2024. That would be ~ 10% of ARKS forecast. But Tesla is years ahead of the western ICE OEMs on all key EV technologies who don't have the battery supply to grow their EV production anywhere near 50% a year. Am I missing facts that could make this a supportable forecast?

Well, I think we forgot about "the machine that makes the machine". This "thing" no one can see, is also ramping up.
Tesla will most likely accelerate the pace and quantity/year they pop-up new factories.

That would make sense, if you are 6 years ahead in that sector. Because it is the chance to dominate for decades.

 

[Remus]

The same could be said about China re: risking the government taking over or at least sabotaging your operations if you fall out of favour.

Actually chance of that happening is very slim comparing to Latin America where major income is selling resources. And the sabotaging wouldn't be much worse than the misinformation that is happening now.
Because doing that would send shockwave across Chinese economy and global investment market with a price tag too high for them to bear.

Privately owned enterprises have been the growth engine of Chinese economy for decades now and the economy growth is what keeps the totalitarian government in power.

Near end of the 2018 the governments media published several "opinion" pieces from high profile "thought leaders" that "private enterprises have finished their mission to advance the economy and it's time for the country to take over". That backfired so badly that Xi himself had to publicly denounce those pieces multiple times.

it's no doubt in my mind Xi was the one behind those idiotic pieces. Of course he wants control of the economy too. Unfortunately none of the state owned enterprises show any sign of life. And he just can't do much about the private enterprises without harming the economy.

 

[ggr]

We're getting close to 10% up ($944.24). Some people will have stop orders to sell at that price. Will TSLA power through, bounce a couple of times, or will it trigger a sell-off?

Edit: I think I jinxed it.

 

[Fobble]

One retirement rule of thumb is that if your annual retirement expenses totals 3-4% of your retirement portfolio, you can retire. The logic is that at that draw rate you will never appreciably impact the principal of your portfolio.

Also, this 4% strategy works only when the investments are put into more stable, less volatile funds. No one should rely solely on TSLA gain and still on TSLA in the retirement. One major correction will force you to go back to work
My retirement incomes are to come from passive real estate rentals. Stock investment gains are for supplemental.

 

[dw4ngg]

We're getting close to 10% up ($944.24). Some people will have stop orders to sell at that price. Will TSLA power through, bounce a couple of times, or will it trigger a sell-off?

I am betting no sell-off today...most are expecting similar price action to Feb 4 and 5, and that is exactly why I don't expect we'll get it.. I think this run shows us $1,000.

 

[Maitri982]

Options sometimes don't make much sense. I had sold the June 2019 $450 puts a couple months ago, and while the stock is up 470 today those options are pricing higher than yesterday.

 

[Earlian]

As we pass $940, I figured it's a good time to update the market cap 3-year view.

• $51 B to catch Toyota as the most valuable auto manufacturer in the world
• Over 4x the value of Ford
• Almost worth the German auto industry combined (TSLA = $173 B, VW + Daimler + BMW = $187 B)
• Every manufacturer except Toyota (+5.3% / yr) and VW (+3.7% / yr) has lost value over the last 3 years (e.g. Daimler -14.7% / yr)

View attachment 512782

Thanks!

This Market Cap Chart, reminds me of the Ev timelapse.

Spoiler: EV Sales US 2012-2019

->

If they don't integrate other sectors, like tech companies, that chart will soon look very much like a lot of crumps besides one rocket. .-)

 

[azaz]

what's crazy is that the wsb/retail folk are staying away scared from feb 4 collapse at 968.....however if we could get above that you'd see a pile on imo

 

[Cosmacelf]

The traditional playbook from China is to fork the factory by stealth opening another one somewhere else and hiring half of your workers away. This is after copying all the machines you have and stealing all the software. Sometimes they go further by having the worker fake declare machine parts wear and tear so they can move these parts to the forked factory.

Then they come to you and say, sell me your factory at half price, otherwise we will openly compete with you.

For domestic companies that are champions of people and high profile, the CCP will come by in secret one day and with some leverage they obtained on you (either your family member's dirty secret or some gov schenaningans) they force you to sign over the majority stake to CCP members. Jack Ma suffered this fate.

TSMC is one of the foreign corps that they haven't done this to yet. But TSMC are very familiar with their playbook and have not moved their most prized processes to China and retained them from Taiwan.

Right. So you see why I'm worried. What do you think China will do to Tesla? I doubt they've turned a new leaf.

 

[davepsilon]

Options sometimes don't make much sense. I had sold the June 2019 $450 puts a couple months ago, and while the stock is up 470 today those options are pricing higher than yesterday.

Makes a lot of sense, the Implied volatility is higher today. In basic terms the pricing represents the thought if it can fly high fast, it could sink fast as well. IV is one half of option pricing. The other being the current stock price. Need to look at both to know if options are a good deal.

 

[juanmedina]

what's crazy is that the wsb/retail folk are staying away scared from feb 4 collapse at 968.....however if we could get above that you'd see a pile on imo

I seen postings of the guy that made 8M last time buying calls.

 

[Nocturnal]

I seen posting of the guy that made 8M last time buying calls.

But he didn't actually sell right so they expired worthless? Options are nowhere near as profitable now as they were then.

 

[lafrisbee]

I run two companies in very competitive markets. i am trying to imagine what I would feel like if I was CEO of a legacy car makers right now sitting there seeing GF1,2,3 done, 4 underway and now plans for 5 and maybe 6 coming into fruition. It's like watching an avalanche coming down the mountain at you and there is literally nothing you can do. Not to mention battery tech and FSD computer.

I think a lot of legacy auto CEO's are dusting off their resumes so they can bail soon so someone else can take the blame when it all comes crashing down around them.

NAAAAAH, they're just loading up on TSLA.