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

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Great blog, @FrankSG thanks for sharing. One question regarding options strategy:

You calculate ROI based on # of shares, not money gain. But, you base this on at expiration date, when time premium value has gone to zero. Why not sell the options 3 months prior to expiration and capture a decent premium in addition to the intrinsic value?

Thank you!

You're the third person who's made a comment along these lines. It's indeed quite risky to hold options until expiration, so I ideally prefer to sell them at least 1-2 quarters before expiration. I simply forgot to talk about this in the blog post.
 
I'd think deliveries of >80k would be interpreted as positive by the market if anything. It'd mean that even in the worst of COVID-19 with its biggest factory being shut down for half the quarter, Tesla barely did worse than before.

But after seeing Q4'19 ER, I thought we'd stay pretty steady, and after seeing Q1'20 ER, I thought we'd rally at least a little higher throughout the quarter, so I could be completely off. I don't know exactly the thinking of big money on Wall Street, so this is just speculation.

I think the market sees that Tesla has strong production capacity in place (and growing next year with the German Gigafactory) but the share price is being held back primarily by two things:

1) Uncertainty about demand in a Coronavirus/post-Coronavirus world. I guess looked at another way it's the risk of longer-term recession and how much demand there will be for Teslas if there is a longer-term recession.
2) US/China trade relations. While it's true that Tesla is more insulated from this problem than most American corporations doing significant business in China, relations between the two countries are in somewhat uncharted waters with a wide range of potential outcomes.

My view of demand is that any recession is likely to be very selective, not broad-based, and Tesla will be able to sell their entire production without taking extraordinary measures. They will probably have more leftover inventory at the end of the quarter than a typical pre-Coronavirus end-of-quarter but that would be more a reflection of approaching the demand limit, not surpassing it. The tell-tale whether this is the case or not will be if inventory keeps growing incrementally in succeeding quarters. The people that are taking the biggest economic hit from Coronavirus tend to be those who are unlikely Tesla buyers (service industry employees in restaurant, travel, airlines, retail). While it's true that the oil industry is taking a big hit from CV, and workers in oil production and refining and related support industries are often well-paid, they are not typical customers of Tesla either. So I'm still pretty bullish on demand.

Of course the share price will be (and is being) affected by potential high volume battery production and efficiencies. Any letdown here could negatively impact share price while confirmation of positive developments will impact the share price to the upside. And of course, China production (which I think will surprise to the upside) and China trade which has the potential to move the share price either direction depending upon how trade relations develop. My gut feeling is the US and China will kiss and makeup with both sides claiming a great victory. But with the current administration, anything could happen.
 
Rob Mauer has been having some fun with Chanos on twitter. It would be good to see an in depth interview where Chanos isn't coddled by TV hosts that accept his premise with only the smallest of consideration.


upload_2020-5-25_7-19-21.png
 
I think the market sees that Tesla has strong production capacity in place (and growing next year with the German Gigafactory) but the share price is being held back primarily by two things:

1) Uncertainty about demand in a Coronavirus/post-Coronavirus world. I guess looked at another way it's the risk of longer-term recession and how much demand there will be for Teslas if there is a longer-term recession.
2) US/China trade relations. While it's true that Tesla is more insulated from this problem than most American corporations doing significant business in China, relations between the two countries are in somewhat uncharted waters with a wide range of potential outcomes.
Regarding US/China trade, agree with your statement but, IMO, the real risk of a trade war is it represents the scariest threat to economic recovery in general. Worst case, it may cause a depression that lasts for several years. China's leadership cares a lot about economic growth, but if they are put in a corner regarding Huawei, Uighurs, Hong Kong and (recent developments in) Taiwan, they will sacrifice growth and choose nationalism. They are playing the long game and believe time is on their side.

I don't take COVID-19 for granted, but a trade war between the U.S. and China is the bigger threat to TSLA's value even though Tesla is "insulated" somewhat.

Trump surely realizes a trade war eruption with China would put recovery in a tailspin and doom his chances at reelection. I think he's playing a risky game of brinkmanship and will back down some.
 
That’s probably illegal. You’re going to hide your license plate when you’re likely to make a big speed violation.

Exactly! :D:cool:

More seriously, I'm not familiar with any laws in the US that would make it illegal simply to have that capability - it would be illegal in every state to actually deploy it on a public road. It's more of a track tool and will certainly require a special mode to be selected before it will activate.:(

I imagine it will be very expensive and have very limited uptake - it's probably being designed more as an outrageous option to give Tesla marketing more cowbell (fastest 1/4 mile of any production car ever).:)
 
Exactly! :D:cool:

More seriously, I'm not familiar with any laws in the US that would make it illegal simply to have that capability - it would be illegal in every state to actually deploy it on a public road. It's more of a track tool and will certainly require a special mode to be selected before it will activate.:(

I imagine it will be very expensive and have very limited uptake - it's probably being designed more as an outrageous option to give Tesla marketing more cowbell (fastest 1/4 mile of any production car ever).:)

The capability alone to hide the number plate would be sufficient to get your car confiscated in Belgium. Actually, only a couple of days ago there was such a case of a guy who got his car confiscated because of an installed (without proof of usage on a public road) license plate flipper: Privacy settings
 
Here's a new blog post for anybody who's bored this weekend:

My TSLA Investment Strategy

This blog contains:
  • A deep dive on how to construct an investment strategy
  • My investment strategy
  • Detailed predictions for Tesla and TSLA for the next 2.5 years
  • A deep dive into options trading

Interesting, certainly seems you give a lot more thought to investments than many. I perused everything on your blog, love your price targets, rarely do I meet someone more bullish than I! I have a couple questions:

1. How much do you own? Feel free to PM, I'll keep it confidential, and share as well. Is your future secure without the funds? My fixed sources of income are such that I could lose everything in options and stocks and still maintain current lifestyle.
2. You might have shared this in the lengthy blog post, but how do you think of different business segments, chance of success in each, and in a way also you confidence in the numbers? I recall that humans overestimate their ability to guess things like this, and also can have their estimates be influenced. (Daniel Kahneman - Wikipedia). Are there things that have influenced you?
3. My understanding of math is that to arrive at a maximum bullish case for TSLA, one needs to take the change of success of each of the business segments working out and MULTIPLY each probability together. For example, if the max bull case of Y sales has 50% chance of success and max bull case of cybertruck has a 33% chance of success, one needs to multiply 1/2 and 1/3 to see the chance of max bull case of both things happening is really only 1/6, or about 17% chance. Adding in different business segments, of which there are many, can only decrease the chance of the entire thing coming out well. Discussion: TSLA has executed well historically and the times might well be a changing, but I think such things ought be considered. Is my understanding of the math wrong? Lottery mathematics - Wikipedia I think that this might cover some of it, but it is kind of like betting on black or red, and if one needs to hit red 6 times in a row, the chance of doing this (random events, not a business run well) is very small. I try and temper my analysis by such things.
4. Do you ever allow your mind to analyze the other side of the argument? Who is selling the stock and options to you and why? What would cause you to sell?
5. How do you account for current value based upon future potential? I've always discounted 20% per year but have no good way of doing this.

If you put out such a long post, and cross post it here, perhaps some flavor as to your position in life would help. Age, income, stability, etc. Do you ever worry that you might unduly influence others that could end up losing money?

I only like ITM options as they have some inherent value to them. I've paid 20% premium above that value to buy LEAPS.
Thanks
 
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Exactly! :D:cool:

More seriously, I'm not familiar with any laws in the US that would make it illegal simply to have that capability - it would be illegal in every state to actually deploy it on a public road. It's more of a track tool and will certainly require a special mode to be selected before it will activate.:(

I imagine it will be very expensive and have very limited uptake - it's probably being designed more as an outrageous option to give Tesla marketing more cowbell (fastest 1/4 mile of any production car ever).:)
The Biggest "BULL"bell will be the 0-60mph if it is faster than anything with wheels. And it could be.
It may even make a "Liberty BullBell" if a writer compares it to some of the rockets.... just thinking about it? What's the 0-60mph for manned Spacecraft? 'could be an amusing graph.
Well just a quick search shows it already beats some (all?) manned spacecraft:
"
How fast does a rocket go 0 60?
To equal 1g of acceleration, a car would need to get to 60 in 2.74 seconds, roughly. If we want to be really, really exact, it looks like 1g is getting to 60 MPH in 2.73511683 seconds.Feb 7, 2017


The Fastest 0-60 Time A Person Could Actually Survive - Jalopnik
jalopnik.com › the-fastest-0-60-time-a-person-could-actua.


But not Dragsters .91sec 0-60 mph.
 
]
I think the market sees that Tesla has strong production capacity in place (and growing next year with the German Gigafactory) but the share price is being held back primarily by two things:

1) Uncertainty about demand in a Coronavirus/post-Coronavirus world. I guess looked at another way it's the risk of longer-term recession and how much demand there will be for Teslas if there is a longer-term recession.
2) US/China trade relations. While it's true that Tesla is more insulated from this problem than most American corporations doing significant business in China, relations between the two countries are in somewhat uncharted waters with a wide range of potential outcomes.

My view of demand is that any recession is likely to be very selective, not broad-based, and Tesla will be able to sell their entire production without taking extraordinary measures. They will probably have more leftover inventory at the end of the quarter than a typical pre-Coronavirus end-of-quarter but that would be more a reflection of approaching the demand limit, not surpassing it. The tell-tale whether this is the case or not will be if inventory keeps growing incrementally in succeeding quarters. The people that are taking the biggest economic hit from Coronavirus tend to be those who are unlikely Tesla buyers (service industry employees in restaurant, travel, airlines, retail). While it's true that the oil industry is taking a big hit from CV, and workers in oil production and refining and related support industries are often well-paid, they are not typical customers of Tesla either. So I'm still pretty bullish on demand.

Of course the share price will be (and is being) affected by potential high volume battery production and efficiencies. Any letdown here could negatively impact share price while confirmation of positive developments will impact the share price to the upside. And of course, China production (which I think will surprise to the upside) and China trade which has the potential to move the share price either direction depending upon how trade relations develop. My gut feeling is the US and China will kiss and makeup with both sides claiming a great victory. But with the current administration, anything could happen.

Over 100,000 dead already, trillions lost, the damage is too great for kiss and make up.
This will have a lasting impact that maybe only time , lots of time can heal.
 
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At this point...with dieselgate, and the ID3... and now corona... what kind of super-optimist has not sold their volkswagen shares? How is ANYBODY thinking that *this*, yes *THIS* is the best place to keep my long term investments. I have no sympathy for anybody who is still holding VW stock. You may as well just burn those share certificates. At least that would provide some warmth.

Honestly, the ICE companies are almost making it too easy for Tesla. Its like shooting fish in a barrel.