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

[bhtooefr]

Note that for the US, "local prevention of deliveries" and "forced production shutdowns" are mutually exclusive; either one is the limiting factor or the other

Depends on how "local" it is, no?

I could see a situation in which both impact Q1 at once, and the conditions for that are right now.

(Forced production shutdown causing a high number of vehicles to be unfinished goods and reduce production totals, and widespread local prevention of deliveries causing a high number of vehicles to be stuck in transit and reduce deliveries.)

 

[lklundin]

Careful, and I'd strongly advise against investing on margin.

Agreed!

Two weeks ago I financed buying some more TSLA by short selling a dozen traditional auto sellers - and my margin leverage has remained basically constant, because the other car makers are apparently affected even more by this crisis. Tesla shareholders are used to seeing their stock make 10%-20% daily swings, those of other car makers not so much...
So, dollar-value wise my leveraged portfolio is having one wild ride...

But someone who buys stock on (cash) margin could very quickly end up with a margin call, with the swings of these days - and with the brokers also re-assessing their risks and their margin requirements.

 

[KarenRei]

I could see a situation in which both impact Q1 at once, and the conditions for that are right now.

Right now? It's your viewpoint that both Fremont is shut down, and extensive areas are banning Tesla from delivery? Right now?

Forced production shutdown causing a high number of vehicles to be unfinished goods and reduce production totals, and widespread local prevention of deliveries causing a high number of vehicles to be stuck in transit and reduce deliveries

Except that if production shuts down, then the delivery pipeline is robbed, and so even a slower rate of deliveries runs out the pipeline (production limited). Alternatively, deliveries are so heavily impacted that whether there's a production shutdown or not becomes irrelevant (delivery-limited). One or the other will be your limit. They're not additive.

 

[j6Lpi429@3j]

I absolutely don't understand anybody selling tesla right now. If you predicted this whole thing a few weeks ago, and got out at the top: huge congratulations.../but the market *will* recover. This is not an asteroid impact or alien invasion. Even worst case projections don't show global economy crippling levels of death.
Given that the market WILL recover, and Tesla is likely even better placed now (due to the weaker competition likely collapsing), then all people who sell today achieve is to lock-in their losses. Mad.

 

[bhtooefr]

Right now? It's your viewpoint that both Fremont is shut down, and extensive areas are banning Tesla from delivery? Right now?

Of course not, but if both were to happen, right now would be the period of maximum vulnerability to it.

And, while Tesla's cash position is presumably quite strong given that they came out of Q4 with a strong position, and they just raised quite a lot of cash, Q1 results can absolutely be affected in both directions. Q1 deliveries, yes, are either production or delivery-limited, but not Q1 financials IMO.

(That said, I'm holding through it, although my options position speculating on Q1 deliveries may well not work out. (Falling knife wounds suck.))

 

[WarpedOne]

Tesla is trading in premarket at less than half it’s all time high.

Call me a buyer.. I wanted 420 USD but I'll take 420 EUR, thank you!

 

[Artful Dodger]

12 business days left, out of 65 (18,4%). Disruption is limited so far, but could accelerate over the next two weeks. There Chinese operations at least look likely to keep surging; it's other locations that are more of an open question.

Reallocating that last RORO from Europe to China is looking pretty shrewd right now.

 

[Fact Checking]

Call me a buyer.. I wanted 420 USD but I'll take 420 EUR, thank you!

Why not have both, i.e. Dollar-Euro parity?

 

[Fact Checking]

While this isn't the coronavirus thread, I thought it might be of interest to the main thread how quickly proper containment measures can have an effect.

Here's the daily log of the Covid-19 outbreak of South Korea, where they quickly addressed the early outbreak via excessive testing and clever tracing techniques:

# "South.Korea" daily new infections log:

Feb 16:     1 new cases,     28 total cases ( +3.4%)  
Feb 17:     1 new cases,     29 total cases ( +3.3%)  
Feb 18:     1 new cases,     30 total cases ( +3.2%)  
Feb 19:    27 new cases,     57 total cases (+46.5%)  
Feb 20:    53 new cases,    110 total cases (+47.7%)  #
Feb 21:    96 new cases,    206 total cases (+46.3%)  ###
Feb 22:   232 new cases,    438 total cases (+52.8%)  ########
Feb 24:   397 new cases,    835 total cases (+47.4%)  #############
Feb 25:   144 new cases,    979 total cases (+14.6%)  #####
Feb 26:   284 new cases,   1263 total cases (+22.4%)  #########
Feb 27:   505 new cases,   1768 total cases (+28.5%)  #################
Feb 28:   571 new cases,   2339 total cases (+24.4%)  ###################
Feb 29:   815 new cases,   3154 total cases (+25.8%)  ############################
Mar 01:   586 new cases,   3740 total cases (+15.6%)  ####################
Mar 02:   599 new cases,   4339 total cases (+13.8%)  ####################
Mar 03:   851 new cases,   5190 total cases (+16.3%)  #############################
Mar 04:   435 new cases,   5625 total cases ( +7.7%)  ###############
Mar 05:   467 new cases,   6092 total cases ( +7.6%)  ################
Mar 06:   505 new cases,   6597 total cases ( +7.6%)  #################
Mar 07:   449 new cases,   7046 total cases ( +6.3%)  ###############
Mar 08:   272 new cases,   7318 total cases ( +3.7%)  #########
Mar 09:   165 new cases,   7483 total cases ( +2.2%)  #####
Mar 10:    35 new cases,   7518 total cases (  +.4%)  #
Mar 11:   242 new cases,   7760 total cases ( +3.1%)  ########
Mar 12:   114 new cases,   7874 total cases ( +1.4%)  ###
Mar 13:   110 new cases,   7984 total cases ( +1.3%)  ###
Mar 14:   107 new cases,   8091 total cases ( +1.3%)  ###
Mar 15:    76 new cases,   8167 total cases (  +.9%)  ##
Mar 16:    74 new cases,   8241 total cases (  +.8%)  ##

Note that it zoomed from 100 to 3,000 cases within 7 days - but then, with the proper measures in place, dropped to below 1% daily growth rate within 10 days from the peak.

In countries where proper containment measures are implemented - such as in Italy finally - I'd expect similarly fast response of the epidemic curve.

Macro sentiment could swing based on such early indicators - but right now we are still going on the fast exponential phase, so more market mayhem is certainly possible and I'd say probable.

 

[Fact Checking]

what is the likelihood that short selling (naked short selling specially) will be banned by US and EU for a while?
it will be interesting development if/when this happens!

I'd say there's a higher chance for this in the EU.

 

[junas]

Agreed!

Two weeks ago I financed buying some more TSLA by short selling a dozen traditional auto sellers - and my margin leverage has remained basically constant, because the other car makers are apparently affected even more by this crisis. Tesla shareholders are used to seeing their stock make 10%-20% daily swings, those of other car makers not so much...
So, dollar-value wise my leveraged portfolio is having one wild ride...

But someone who buys stock on (cash) margin could very quickly end up with a margin call, with the swings of these days - and with the brokers also re-assessing their risks and their margin requirements.

Can you share more details of your strategy? How your expenses of short selling compare to traditional cash margin? I've been considering this OEM-shorting approach for a while and just got rid of my remaining cash margin. I've of course made my own calculations, but since this is new strategy for me I want to be sure to get it right. Previously dividends have kept me out of shorting OEMs, but this crisis will probably wipe out that limitation. While we all know this crisis will end sooner or later, it's pretty important to evaluate strategy when market fundamentals change.

Background: I've been lurking here since 2015 and formed most of my Tesla investment thesis based on this thread. I know it's extremely bad timing for a first post, but this lockdown frees up time to participate. Also, now for the first time since Model3 ramp-up I'm not sure how to play this stock going forward.

 

[NicoV]

While this isn't the coronavirus thread, I thought it might be of interest to the main thread how quickly proper containment measures can have an effect.

In Belgium, we have about the same number of new cases for 3 straight days, after a period of daily doubling of new cases. Hopefully that’s the effect of social distancing from last week, as the actual quarantaine measures are only a couple of days old.

This belongs in the investing thread, because, if I can see the trend, others can see that too, and see the light at the end of the tunnel. This week may give us hard data that the epidemic may get under control in a large part of Europe. And that may stop the panic and trigger a reversal on the stock prices.

 

[thait84]

Just a small shower thought. With the uptick rule in place, but the stock still going down, is it possible that institutions are unloading? We saw a lot of them load up during the run up in Dec / Jan. I'm sure those funds need to rebalance due to the mess the market is in.

 

[lklundin]

Can you share more details of your strategy? How your expenses of short selling compare to traditional cash margin? I've been considering this OEM-shorting approach for a while and just got rid of my remaining cash margin. I've of course made my own calculations, but since this is new strategy for me I want to be sure to get it right. Previously dividends have kept me out of shorting OEMs, but this crisis will probably wipe out that limitation. While we all know this crisis will end sooner or later, it's pretty important to evaluate strategy when market fundamentals change.

Background: I've been lurking here since 2015 and formed most of my Tesla investment thesis based on this thread. I know it's extremely bad timing for a first post, but this lockdown frees up time to participate. Also, now for the first time since Model3 ramp-up I'm not sure how to play this stock going forward.

Here is my first post on this topic:
Tesla, TSLA & the Investment World: the 2019-2020 Investors' Roundtable

After two weeks I have paid about 1/1000 in interest - added to that is a dividend payment on my GM stock, about 1% of the proceeds on the sale of that stock. These are realized losses. The unrealized gains from the short sale are currently orders of magnitudes larger - and slightly exceed the unrealized loss on the TSLA I bought for the proceeds.

Even apart from the moral questions connected with short selling, I am unsure if this is an advisable strategy. But it's an entertaining strategy. Whether my increased Tesla long exposure will make up for the cost of the short selling is yet to be seen. From experience I am not very good at taking profits, so it will be interesting for me to see how I manage with my current portfolio.

 

[flabellina]

That is only talking about people taking longer than 14 days to show symptoms. There are many more that don’t ever show symptoms, but still carry and spread the virus (asymptomatic transmission).

My point was made in the context of why shipments of goods and ro-ro ships are unlikely to be stopped from the US to Europe even if we have a strong increase of cases in the US, while the most likely problem for tesla in terms of shipment would instead be getting the cars delivered if countries go in a lockdown.
There are some rare cases where incubation lasts more than two weeks, but obviously two weeks of quarantine are considered enough in most cases, therefore you can be reasonably confident that a ship that has been at sea for over two weeks is safe.

 

[KarenRei]

Just a small shower thought. With the uptick rule in place, but the stock still going down, is it possible that institutions are unloading? We saw a lot of them load up during the run up in Dec / Jan. I'm sure those funds need to rebalance due to the mess the market is in.

The stock price doesn't get cut in half without huge amounts of assets being unloaded.

 

[NicoV]

Case reports from Belgium? No, they don't. No more than case reports from Iceland,

Case reports from Fremont, Reno, Buffalo, Shanghai on the other hand... or any news that would interfere with deliveries

Not a case report, but a TREND report.
Since most of the Tesla’s destined for Europe enter via the Zeebrugge port in Belgium, our situation is very relevant. Much more than Iceland’s situation. Or Italy, or Spain.

 

[X Fan]

Possible Q1 impacts:

• Fremont, GF1, or critical supplier with no stock forced into shutdown. Only affects North America, primarily the US. To the extent possible, Tesla would react by burning through showroom, test drive, loaner, etc inventory. There's significant inventory in transit right now in many markets.
• Local prevention of deliveries (US, EU, other... unlikely China). I'd expect Tesla to respond by moving forward Q2 deliveries in areas where they're not restricted (if enough of such areas remain) and allocating inventory to those areas.
  • Note that for the US, "local prevention of deliveries" and "forced production shutdowns" are mutually exclusive; either one is the limiting factor or the other
• Employee disruptions. In Europe a number of countries are closing their borders (to people, not goods), and encouraging their citizens to come home. This could have an impact on Tesla employees working in other countries than their native lands (a lot of our employees here are Norwegian, for example). One can expect Tesla to respond by shutting down non-urgent services (stores, service, etc) to reallocate staff to deliveries, and to encourage overtime by employees to the maximum extent legally possible.
• Cancellations. I don't expect this to be a big factor, but it could occur in some cases. Note that like "local prevention of deliveries", it's a countercurrent to "supply disruptions"; both cannot limit at the same time.

12 business days left, out of 65 (18,4%). Disruption is limited so far, but could accelerate over the next two weeks. There Chinese operations at least look likely to keep surging; it's other locations that are more of an open question.

Karen-
Agree with your post. I’d add that China’s production also could be impacted by parts shortages.

 

[samppa]

I retrofitted bio-weapon defense mode to my pre-fl model S. Success!

 

[Artful Dodger]

O well...better start dusting of my SPARTA memes!

How to HODL in ancient Greece:

It'll be fine. Not selling a share 'til 2027.

Cheers!