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

[jerry33]

He even goes so far as to say that the electricity Nikola is getting from the "federal transmission lines" is very clean,

I have never heard that transmission lines could generate electricity. I'm pretty sure the "federal transmission lines" get their electricity from the same places that everyone else gets theirs.

 

[Bullish_Bear]

I know it could be a less pleasant topic, but if unluckily Tesla reports a slightly negative GAAP earning on Wed, what will happen to the stock price? I would expect a retreat of roughly 15% in a couple of days...Any thought?

 

[smorgasbord]

I know it could be a less pleasant topic, but if unluckily Tesla reports a slightly negative GAAP earning on Wed, what will happen to the stock price? I would expect a retreat of roughly 15% in a couple of days...Any thought?

15% would be a mild reaction.
I'd expect a 20% drop minimum, 33% likely. That's $1200 and $1000, respectively.

Which is OK. I can HODL for another quarter.

 

[oldTAVguy]

Below is a typical CNBC headline in describing the state of the market. I actually contains ZERO useful information.

Stock futures rise slightly as Wall Street tries to extend last week’s gains

 

[SpaceCash]

I know it could be a less pleasant topic, but if unluckily Tesla reports a slightly negative GAAP earning on Wed, what will happen to the stock price? I would expect a retreat of roughly 15% in a couple of days...Any thought?

it'll tank beyond your wildest dreams, like 600 would be in play

yes I'm serious.

However, they turned a profit so don't worry

 

[FrankSG]

So what you and @FrankSG are saying is that profit for Q2 is guaranteed

Nothing is ever 100% guaranteed. Although I undershot Q1'20 by $200M due to underestimating regulatory credits, I overestimated Q2 deliveries by ~10k units.

Also somebody in the near-future financials thread pointed out a mistake I made by forgetting Tesla can't recognize all of the $7k revenue from an FSD package yet. If it's only 50%, that'd mean my numbers should be reduced by $60M.

 

[FrankSG]

A note of thanks to @FrankSG

On of my favorite quotes has always been:

Everything should be made as simple as possible, but not simpler.

Albert Einstein

Well done Frank. Concise, on point, and informative. I learned a great deal. There are many sages, exponentially more important, are those with the gift of teaching,

I have led my children into investing in tesla; I’ve just forwarded your blog to them. Thanks again, for your work.

Thanks for the kind words, Jack!

I enjoy your posts that often contain bits of wisdom. Keep them coming

 

[Bullish_Bear]

it'll tank beyond your wildest dreams, like 600 would be in play

yes I'm serious.

However, they turned a profit so don't worry

IMO things could be less scary. The reasons:
1. There is rumor that SP500 committee could override the rule to let Tesla in even if Tesla was not profitable last quarter due to Covid influence. I know the chance would be slim but it is a headache for shorts.
2. If the loss is minor, the market will expect the inclusion in next quarter (almost for sure). So 3 months seem not that long to me...

 

[MP3Mike]

New video showing large equipment being moved into the new factory space in GigaShanhai:

 

[Intl Professor]

I usually fail to understand the forces driving Tsla valuation by the market. When it shoots upward spiritual forces like the blessings of my Thai mother in law, who identifies herself at the bank by thumb, are as good as any. A recent example. "May your money pile so high it looks like a termite mound." Just saying. Not an advice, just a blessing.

Since she can't write, she keeps account of her sale of rice and veggies to other villagers, sometimes on credit, all from memory. Could be up to a hundred customers. She makes fun of me unable to make myself understood in five languages.

 

[Artful Dodger]

it'll tank beyond your wildest dreams, like 600 would be in play

yes I'm serious.

However, they turned a profit so don't worry

We saw a 2/3rd's cut in the SP only once, following the Fremont shoot dune. So a $600/$1,800 is off the table IMHO if all that occurs is a petite Ms. on GAAP profitability.

BTW, we only saw a 1/2 cut to the SP ($360>$180) in 2019Q2 after the big loss reported in Q1 results. That scenario is also not going to reoccur in 2020Q2. There's even rumors of the S&P Committee adding TSLA to the Index no matter what the results are for Q2, just to release the pressure of this extended game of musical chairs we've been engaged in for the past 3 years.

That announcement would instantly kill any drop in SP from a slightly negative Q2 report, and unleash the POLKA music! ♫

But as you rightly stated, Q2 will be GAAP profitable so this is all academic.

Cheers!

P.S. I'm 100% All-in Equity; 0% Margin; 0 Hedges held heading into Earnings and the S&P

 

[HG Wells]

I usually fail to understand the forces driving Tsla valuation by the market. When it shoots upward spiritual forces like the blessings of my Thai mother in law, who identifies herself at the bank by thumb, are as good as any. A recent example. "May your money pile so high it looks like a termite mound." Just saying. Not an advice, just a blessing.

You do realise termites LOVE paper money.

 

[Cherry Wine]

I know it could be a less pleasant topic, but if unluckily Tesla reports a slightly negative GAAP earning on Wed, what will happen to the stock price? I would expect a retreat of roughly 15% in a couple of days...Any thought?

Depends on definition of “slightly.” Also hard to gauge market reaction without knowing other variables - guidance, margins.

 

[smorgasbord]

We saw a 2/3rd's cut in the SP only once, following the Fremont shoot dune. So a $600/$1,800 is off the table IMHO if all that were to occur is a small Ms. on GAAP profitability.

BTW, we only saw a 1/2 cut to the SP ($360>$180) in 2019Q2 after the big loss reported in Q1 results. That scenario is also not going to reoccur in 2020Q2. There's even rumors of the S&P Committee adding TSLA to the Index no matter what the results are for Q2, just to release the pressure of this extended game of musical chairs we've been engaged in for the past 3 years.

That announcement would instantly kill any drop in SP from a slightly negative Q2 report, and unleash the POLKA music! ♫

But as you rightly stated, Q2 will be GAAP profitable so this is all academic.

Cheers!

P.S. I'm 100% All-in with Equity; 0% Margin; 0 Hedges held heading into earnings and the S&P.

So, I have a decent HODL allocation of TSLA.
What short-term plays are TMCers doing to profit from Tesla's Q2 profit this week?

For instance, 24 Jul $1750 Calls cost about $39. That's betting TSLA goes over $1800 this week. Or, are people doing fancier things like Bull Call spreads to reduce the upfront cost?

 

[AZRI11]

Indeed OT... but just for a cheap laugh here in the last weekend before earnings (fingers crossed) -

- an oldschool Mercedes-Benz training video for salesmen. I just love ancient movies about dinos... and the antique VHS quality.

cheers everyone!

Is there a RadioShack salesman video on YouTube?

 

[EVortex]

Elon’s subtle (and not so subtle) reactions to date have been enough to convince me to continue to bet the farm on TSLA through Q2 earnings and beyond.

 

[Intl Professor]

Elon’s subtle (and not so subtle) reactions to date have been enough to convince me to continue to bet the farm on TSLA through Q2 earnings and beyond.

I'm cashing out farms selling other assets. I will not sell TSLA though.

 

[smorgasbord]

The data is stale from last Friday, but looking at the Sept options chain, a synthetic long (sell a put, buy a call) at $1500 will cost you about $3. That's a really cheap alternative to buying TSLA shares at $1500, as long as you're comfortable with the 18 September expiration (3 days after Battery Day). Note that on the downside you have to come up with cash to cover. You could push it out to Oct for not much more in the hopes of capturing a Q3 profit should Q2 disappoint.

EDIT: See correction below. Battery Day is actually Sept 22!

 

[⚡️ELECTROMAN⚡️]

To be fair, I've never seen anyone here say that buy and hold is always better than options!

I'm probably one of the biggest proponents of buy and hold investing to produce wealth and I've made considerable (huge) profits last year and into this year on call options. I buy them whenever I see the risk/reward ratio has turned wildly in my favor but I don't feel the need to constantly have open options. Unless the odds are hugely in your favor (mispriced due to a large discrepancy between perception and reality) then trading option is just hard work compared to buy and hold investing.

When possible, I like to build wealth the easy way. And for the vast majority of investors, buying and holding great companies is a much more certain path to build wealth.

Do you inform your fellow TMC friends about these opportunistic times for call options or are we on our own?

 

[MP3Mike]

The data is stale from last Friday, but looking at the Sept options chain, a synthetic long (sell a put, buy a call) at $1500 will cost you about $3. That's a really cheap alternative to buying TSLA shares at $1500, as long as you're comfortable with the 18 September expiration (3 days after Battery Day)

You mean 4 days before battery day.