We don’t visit our 80+ yo parents anymore since last week out of precaution, and have urged them to only get out of their house for groceries.
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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
- Start date
We don’t visit our 80+ yo parents anymore since last week out of precaution, and have urged them to only get out of their house for groceries.
Is Fremont still pack constrained? If so, what does the recovery ramp look like? How long would it take to build and ship 3 weeks worth of additional production?
Q1 loses two weeks of production on the tail, plus delivery opportunities. Q2 loses a week of production but delivers the Q1 overhang followed by a glut of available components for 3 and Y.
If GF1 can stay running, that is.
Pras
Member
Honestly production is never going to be an issue. This shortfall will cover for any blip in demand. The best way to think is that the country should write off 2-4 weeks of full GDP. Which I assume will equivalent to 2% lost gdp. Additionally there will be regular slowdown impact. So total gross contraction for the year in 5%. The stock market is already pricing that. Today’s stock fall already assumes disruption in tesla and broader market so we should not panic on lost revenue. Even if tesla delivery drops by 20% we will have a net growth year. Not bad.
I would remind everyone that the San Francisco shutdown is 3 weeks minimum. The factory could potentially be shut for significantly longer.
Not that I’m at all negative on Tesla long term (on the contrary I picked up some $1000 strike Jun 2022 call options today), but the short term situation might be pretty crap for Q2. Expect a lot of Tesla factory employees to be furloughed (temporarily laid off) possibly. Tesla has plenty of cash to whether the storm, but a big chunk will possibly be taken up as working capital situation changes (it will have to pay for all the materials it used in Q1 production, without having revenue coming in from end of quarter and early Q2 deliveries which it would be normally using to pay those bills.)
Put bluntly - working capital leverage deterioration is possibly going to create some big negative headlines for Tesla (and many other companies)
Not that I’m at all negative on Tesla long term (on the contrary I picked up some $1000 strike Jun 2022 call options today), but the short term situation might be pretty crap for Q2. Expect a lot of Tesla factory employees to be furloughed (temporarily laid off) possibly. Tesla has plenty of cash to whether the storm, but a big chunk will possibly be taken up as working capital situation changes (it will have to pay for all the materials it used in Q1 production, without having revenue coming in from end of quarter and early Q2 deliveries which it would be normally using to pay those bills.)
Put bluntly - working capital leverage deterioration is possibly going to create some big negative headlines for Tesla (and many other companies)
Fact Checking
Well-Known Member
Here's the County of Santa Clara order:
Tesla factory might be exempted:
Tesla factory might be exempted:
For the purposes of this Order, "Essential Businesses" means:
If hedge funds, business rags and car dealerships can stay open, Fremont certainly looks essential as well as an "auto-supply" facility.- Newspapers, television, radio, and other media services;
- Gas stations and auto-supply, auto-repair, and related facilities;
- Banks and related financial institutions;
- Hardware stores;
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adiggs
Well-Known Member
I just started thinking about this today. I think it's time to have a conversation with my wife (we make these decisions jointly).
I would go WAY out of the money and approach this as more of a dividend style play, with the downside of accidentally acquiring more Tesla shares at a really good price (like selling 300 strikes for $24 for example). I could take on some additional TSLA shares for $276...
Repeat monthly - that would be some really good dividend money (like 8% per month!?!).
For those not clear on selling puts to generate income, the big downside (which I narrowly avoided in '12 / '13) is you're busy collecting premium month to month, but never get assigned. Then the stock price takes off and you don't have any shares. In '12, we got assigned at a 29 strike. In retrospect, I don't know if I'd have continued selling puts until I got assigned, and about 5 months later is when the stock took off and established it's new trading range in the 130-180 range. I could have easily been on the sidelines for that. I learned therefore, that if I really want a position (long shares), then I should seriously think about just buying and getting too cute.
This works well for me because I have about as many shares as I really want. If I did get exercised, I probably start selling nearby OTM calls to turn those exercised puts back into cash (rinse, repeat). The overall trade can still go "badly", in either direction.
In my case, what makes it work is being assigned more shares that I would gladly take, and being paid in the meantime (or forever) not to take them. I won't "miss out" on a big share price rise, because I'm already positioned adequately (for me) for that big price rise.
Alphacrux
Member
I’d better get out for supplies here in Austin while we can. We’ve got only a couple of weeks worth of beer left.
I read that as auto parts stores (for repairs, oil, wiper fluid), not manufacturers.
Although, isn't Tesla the only auto plant in CA? Might have/ get a non listed exemption.
I think this all gets offset by the COGS side of that equation. 18k of cars, 250M of revenue (Karen's WAG), but less 200M of COGS = $50M Q1 loss?
-- rescinded. Fact Checking's numbers are better.
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What if Elon puts up another tent in Fremont, and declares it his home where everyone there can also live?
There's space on the roof too!
Buckminster
Well-Known Member
UK just got locked down. I'm WFH indefinitely.
Fact Checking
Well-Known Member
Unless these are well defined terms, government orders should generally be read in the most permissive fashion. (But I don't know how to interpret county health directives.)
Great info! Please note Telsa's HQ is located in Palo Alto, which belongs to Santa Clara county. The Fremont factory is within Alameda County. But I suppose the order would be similar.
mars_or_bust
Member
OK, Elon did the right thing, and indirectly (and in a very smart manner) admitted that his corona virus stance was wrong. He is now tweeting potential cures for the virus. I predicted (got a ton of disagrees for that) that Elon would during the weekend do the grown up thing and admit he was wrong -was off by one day 
I sure hope so, because my job requires utility capital projects to continue. (I'm on the software side) FWIW, utility companies are pretty much immune from market downturns. Regulated prices/costs, and people really can't decide to stop using electricity just because the market is down.
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