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

[MC3OZ]

As Tesla has stated run rates for Model 3 + Y will be 500K by the end of 2020, it is a conservative assumption that is approximately 10K combined per week roughly 6K Model 3, 4K Model Y.

So a run rate of 4K Model Y per week at Fremont by the end of 2020 is a conservative assumption... it may be higher

This is just speculation below, so there is every chance I am wrong... but ....

I never explained why I was so interested in the run rate of casting, if we assume a full size casting machine with one casting per Model Y, then 1 casting = 1 car produced, assuming no other bottlenecks..

If casting is the rate determining step, then the number of casting machines required determines the number of factories, and the casting machines at each factory.

So for example, if the combined volume of EU + UK required 3 casting machines, then 2 in Berlin and 1 in the UK possibly makes sense...

It is probably just "confirmation bias", but everything the Tesla is doing appears to make sense... if we think in terms of casting determining the production rate.

So casting in the UK might eventually support Model Y + 3 production for the UK, with stamped parts possibly coming from Germany, with local UK, body shop, paint and GA..

I don't think that necessarily means cars for other RHD markets would come from the UK, local UK demand for 3 + Y and energy storage batteries might be sufficient to justify a factory...

I can see a lot of merit in multiple factories with paint and GA located close to the end customer.. This depends om the level of local demand and the cost of the factory.. seems to me the UK is a market that might be big enough..

 

[Artful Dodger]

Germany initiates a €130 bn stimulus package with €50bn for future investments that include BEVs and charging infrastructure.

VAT reduced by 3% for all vehicles starting July 1st.

Good news for BEVs but as a result almost no cars will be sold in June.

Or in means Tesla will offer a 1.500 Euro price cut in Germany. Easily doable since its less than the recently announced US price cuts for Model 3. Those cars gotta move.

Cheers!

 

[Zero CO2]

Do you believe the markets are forward looking?
If so, would all of these events you mention as possibilities for a pullback not already priced in given where the market is?
Unemployment? The market really couldn’t care less at this point from what I’ve seen.
The market is also practically saying all these events have no impact on Tesla whatsoever.

yup stock market is forward looking .... I think you are helping making my point .... the market IMHO is detached from reality ... it is not rational... that is precisely the definition of a bubble or a castle in the air... for the rise to continue unfettered the thesis has to be looking forward everything goes back to what is was pre-covid ... in fact better than it was pre-covid.... the upslope of the V continues to rise ...

I just don't see it ... macro environment will have an impact on Tesla at some point ... Tesla is better positioned than competitors and i will continue to invest ... but you cant say that TSLA is insulated from the macro environment ... at least not yet ....

i feel like we are actually talking about investing i am loving the debate

 

[Artful Dodger]

After-action Report: Wed, Jun 03, 2020: (Full-Day's Trading)

VWAP: $888.08
Volume: 7,956,883
Traded: $7,066,355,523.41 ($7.07 B)

Closing SP / VWAP: 99.42%
(TSLA closed BELOW today's Avg SP)​

FINRA Short/Total Volume = 38.5% (43rd Percentile rank Shorting)
FINRA Volume / Total NASDAQ Vol = 55.9% (57th Percentile rank FINRA Reporting)
FINRA Short Exempt Volume was 1.47% of Short Volume (53rd Percentile rank).

Comment: "Did I mention TSLA 'returning to the Upper-BB'? (+/- $0.03)"

 

[adiggs]

After-action Report: Wed, Jun 03, 2020: (Full-Day's Trading)

VWAP: $888.08
Volume: 7,956,883
Traded: $7,066,355,523.41 ($7.07 B)

Closing SP / VWAP: 99.42%
(TSLA closed BELOW today's Avg SP)​

FINRA Short/Total Volume = 38.5% (43rd Percentile rank Shorting)
FINRA Volume / Total NASDAQ Vol = 55.9% (57th Percentile rank FINRA Reporting)
FINRA Short Exempt Volume was 1.47% of Short Volume (53rd Percentile rank).

Comment: "Did I mention TSLA 'returning to the Upper-BB'? (+/- $0.03)"

Do you have an updated guess for this Friday's close? You seem to have that nailed - I remember your most recent guess as $880.

 

[StealthP3D]

If Phase 1 doesn’t look anything like the previous bear markets, why should Phase 3?

True. But even more telling is that phase 2 doesn't look anything like previous bear markets either (they just forgot to add the most recent market moves to the illustration). Actually, this graph came from an article published on April 26th and yet it fails to show the S&P climb out of the hole between April 21 and April 24. After that, it continues climbing for the next 5 weeks. That makes this chart stale and shows that it represents a failed theory.

Market Stalls, Is The Bear Market Rally Over?

 

[StarFoxisDown!]

So i ask what happens to TSLA in early Q3... if Q2 deliveries are disappointing (to weak longs and other manipulators) ... while at the same time in July/August Q3 companies are announcing dismal earnings ... I guess i am just getting tired of this pandemic ... i will stop now

Haha, I mean I get the concern about kind of a perfect storm of bad earnings, economy data not improving, etc...but I just don't see big money ignoring what's going to happen in Q3 and Q4. I really could only see a short knee jerk negative move on Q2 P/D numbers if they're below 70k. But I actually think Q2 earnings is a complete non factor with only positive upside. By Q2 earnings date, we'll already be a month into Q3. The market is already expecting a loss for Q2 and all Tesla has to do is reiterate full year guidance and/not change guidance and the market will completely ignore Q2's loss because they can do the math and see if Tesla still thinks it's going to sell 500k vehicles, then it's going to produce/deliver 330-350k vehicles in Q3 and Q4.

Just think about that guys, there's a good chance Tesla will be producing 175k vehicles in just one quarter.....and we're only a month away from the beginning of that

 

[smorgasbord]

yup stock market is forward looking .... I think you are helping making my point .... the market IMHO is detached from reality ... it is not rational... that is precisely the definition of a bubble or a castle in the air... for the rise to continue unfettered the thesis has to be looking forward everything goes back to what is was pre-covid ... in fact better than it was pre-covid.... the upslope of the V continues to rise ...

I just don't see it ... macro environment will have an impact on Tesla at some point ... Tesla is better positioned than competitors and i will continue to invest ... but you cant say that TSLA is insulated from the macro environment ... at least not yet ....

i feel like we are actually talking about investing i am loving the debate

It is wrong to think that all businesses, market segments, and people are impacted the same way in any depression/recession.

In the Great Depression of the 1930's, Hollywood grew enormously as movies now had sound and were an affordable entertainment option. Proctor & Gamble stepped up advertising, including producing its own radio shows, and kept sales up while competitors slumped.

Today's there a big difference between running an airline and running a video conferencing company, between running retail stores and a SaaS business. Between running a movie theater and SVOD. We've seen a huge shift in how people work and live, and while things will not stay the way they are today, they also won't go back to what they were previously. The shift to virtual and online environments was happening anyway, and the lockdowns have accelerated that shift.

There are winners and losers and it's incorrect to characterize what's happening today as affecting everyone and every business the same.

 

[Thekiwi]

View attachment 547750

Can someone confirm that Tesla current offers a sub-40k euros model 3 in Germany that will qualify for the 9,000 euro subsidy? Looking at the German version of Tesla.com it currently lists the cheapest Model 3 at 43,990 euros. Is the 40,000 euro limit before or after VAT?

 

[Artful Dodger]

Do you have an updated guess for this Friday's close? You seem to have that nailed - I remember your most recent guess as $880.

In a low-news, low-volume environment, IMO Friday's Close will depend on Market Makers and Max-Pain. Keep an eye on this chart because the Options mix is changing throughout the week: GLTA!

Stock Option Max Pain

In general, right now I would expect TSLA to ride up with, and capped by, the Upper-BB, but again with low volume, the SP will be easy to manipulate until we get some news that creates some volume (like happened Monday).

Cheers!

 

[StealthP3D]

Anecdote from my BIL who had a run-of-the-mill Ford F-150 that just came off a 2 year lease in mid-April during the COVID-19 peak: The local dealership was pensive about making any sort of commitment during the turn-in and they were still trying to figure out how to WFH, seemed scared, and clueless. Since my BIL has a second car and neither he or his wife and family are driving anywhere for the foreseeable future, he figured he'd wait until the dealerships started getting desperate to get a new (or 2019) F-150 since he could easily get by for the next few months without it.

He said there has been a complete reversal over the last ~2 weeks with the various Ford dealerships. Now they won't even return his call or email, they're totally unwilling to budge or deal or negotiate - "The price is what it is. We can do 0% financing for 7 years, but it'll be at full MSRP. We barely have enough in-stock as it is, so this is our best offer." Since he's got nothing to lose, he called their bluff, and so far, they're sticking to it and have not engaged him for over a week.

We talked about it a bit and can't totally make sense of it, but there are articles that indicate the traditional auto dealers (or at least pickup trucks) are actually doing pretty good right now. It may have been the case that production dipped in concert with demand and both are on a rebound right now, with demand briefly outstripping supply, causing dealers to DGAF right now.

How this pertains to Tesla?
I think this is yet another check-mark in the "incredibly bullish" column. I realize light/medium-duty trucks are not cross-shopped with S/3/X/Y, but I think this bodes extremely well for the remainder of the year.

Your brother-in-law should check who owns those Ford dealerships. It's not uncommon for all the dealerships over a wide region to be owned by the same family or consortium. It's often very anti-competitive because they will set a "do not go below price" (which isn't that low) and then every dealership sticks to it. The consumer thinks he is "shopping around" but keeps running into the same price wall put in place by the same people. Even when they are not owned by the same people they will often price collude in this manner through unwritten agreements (although this is illegal while the former really isn't). It's very profitable for them because they can increase their profit on each vehicle by thousands. The manufacturer doesn't like this because there are a few people who will choose a competing brand once they compare values but the colluding dealerships don't care because what they lose in a few sales they more than makeup for it with high margins. And there is little the manufacturer can do about it because the dealerships are largely independent. Brand loyalty is strong in the pickup market so there aren't too many defections because of this price-fixing.

 

[Artful Dodger]

TSLA is $100 ahead of pace for a 'V-shaped' recovery

Feb 3, 2020: $780.00
Apr 3, 2020: $480.01
Jun 3, 2020: $882.96​

Cheers!

 

[Singuy]

Can someone confirm that Tesla current offers a sub-40k euros model 3 in Germany that will qualify for the 9,000 euro subsidy? Looking at the German version of Tesla.com it currently lists the cheapest Model 3 at 43,990 euros. Is the 40,000 euro limit before or after VAT?

Using google translate.

Under the pricing of 44,970

"Incl. VAT of approx.7,180 €
Processing fees of € 980 Incl.
€ 3,000 environmental bonus (net)"

This puts the car at 39,810 euros if you subtract the VAT/Processing fees and then add in the environmental bonus

 

[geneclean55]

Can someone confirm that Tesla current offers a sub-40k euros model 3 in Germany that will qualify for the 9,000 euro subsidy? Looking at the German version of Tesla.com it currently lists the cheapest Model 3 at 43,990 euros. Is the 40,000 euro limit before or after VAT?

Not clear to me from the text that the limit is only for cars 40k euros and less.

"With the environmental premium, we promote the replacement of the vehicle fleet with climate-friendly and environmentally friendly electric vehicles. In the existing system, the federal premiums will double as a new "innovation premium". The premium of the manufacturer remains unaffected. This means, for example, that up to a net list price of up to 40,000 euros, the subsidy of the federal government rises from 3,000 to 6,000 euros. This measure is limited until 31.12.2020."

 

[Christine69420]

TSLA is $100 ahead of pace for a 'V-shaped' recovery

Feb 3, 2020: $780.00
Apr 3, 2020: $480.01
Jun 3, 2020: $882.96​

Cheers!

So what is that then? A check mark shaped recovery?

 

[FrankSG]

I believe this is most likely purely for delta hedging.

Citadel did not own a single TSLA share as of 31/3/2020, according to their 13F:

SEC FORM 13-F - Citadel Securities - Effective Date 31/3/2020

However, they did own 7.3M shares worth of call options, and 5.9M shares with of put options, and a handful of TSLA Bonds.

Even if it's not purely for delta hedging, it's likely a short term play, because they do not have a history of building and holding onto a large TSLA stake:

View attachment 547403

Source: Fintel.io

Looks like I made a slight mistake here, because Citadel Securities and Citadel Advisory appear to not be one and the same.

However, Wikipedia mentions this:

Citadel Securities, one of the leading market makers in the world, whose trading products include equities, equity options, and interest rate swaps for retail and institutional clients

So the overall conclusion was correct.

 

[FrankSG]

Where are you getting you're capex figures? In Q1 2020 capex was $455M, 7.6% of revenue, but you're supposing 15.9%. Tesla could be underinvesting relative to the revenue growth you are anticipating.

You might also want to check your FCF calculation against what Tesla has reported in the shareholder letter.

I know that mine are much higher than what Tesla projects in their 10-Ks and 10-Qs, but Tesla is going to have so much money coming in (according to my predictions), that I decided to forecast slightly higher CAPEX. Q2 will almost certainly be less than what's in the model, but I plan to take a closer look at Q2 after Q2 P&D.

Mine might be operating cash flows minus investing cash flows, rather than operating cash flows minus capex? That's a small difference yes, I'll make sure to correct it in the future.

 

[elasalle]

Germany initiates a €130 bn stimulus package with €50bn for future investments that include BEVs and charging infrastructure.

VAT reduced by 3% for all vehicles starting July 1st.

Good news for BEVs but as a result almost no cars will be sold in June.

With only like 1 ship EU bound this quarter, I think there will be enough demand in EU to soak up all inventory though.
By 2021, GF Berlin would be online - so no import taxes after that i presume.

 

[Artful Dodger]

Baby on Board.

 

[elasalle]

This is the greatest 50-day rally in the history of the S&P 500

More room to run....

Fear & Greed Index - Investor Sentiment - CNNMoney is at 61 (Greed). Not yet at Extreme Greed.