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

[smorgasbord]

So does Apple.

That said, the dividends Apple, Microsoft, Nvidia, and AMD pay are relatively small. They are more like tokens of appreciation than actual investment income, so to speak. The so-called S&P 500 “Dividend Aristocrats” are typically very stable companies in mature, non-growing industries.

Dividend Aristocrats: List & Definition | The Motley Fool

These are the companies that I will one day hold my portfolio in and live off the dividends as my retirement income. But that day is still far in the future for me, today I still need to grow until I have an actual retirement sized portfolio and that means TSLA and my other tech holdings.

I will never hold those companies. Go back a couple years and see recommendations for XOM and Marathon Oil - they used to be consistent dividend payers until, well, you know (eg 3 Top Oil Stocks to Buy Right Now | The Motley Fool ).

 

[M|S|M MYP]

I'm not sure I agree with this.

Sure,

• They've dealt with large inclusions before with market caps in the same ballpark as Tesla
• They've dealt with companies coming straight into the S&P 500 before that skipped over the S&P 400.
• Perhaps they've occasionally dealt with a stock with such a large short interest.

However, I'm not sure they've ever included a stock with:

• Such a massive options market (currently an order of magnitude larger than any other). Has there ever been an options market as massive of TSLA's current options market?
• A stock with so many different opinions on its true value, and so many sky high price targets. Probably not too many stocks where a large portion of investors won't even consider selling after SP goes 10x within a year, and some (me) wouldn't even considering selling if it went 25x within a year.

The ginormous TSLA options market and how many shares it takes out of circulation in particular is something that heavily impacts the S&P 500 inclusion, and I'm not sure how aware the committee is of this and how well they understand it.

All these factors combined make for a truly unprecedented S&P 500 inclusion, and I'm doubtful the committee understands this as well as some TMC members and retail investors.

Whoa...whoa...whoa.....25 times in a year? Seriously would have to consider taking some off the top don’t ya think??

 

[Chunky Jr.]

If Tesla ever got to the point where it was generating more cash than it knew what to do with, the stock would be worth many multiples of what it is now. Maybe the dividends could pay for a few extra fruity drinks on the private islands.

 

[WVCS]

Recent Tesla Energy related discussions have included comments along the lines of “each of us in the energy business” and “distributed utility” worth “trillions of dollars”. For clarity, let’s use the term “Homeowner Utility” to refer to the phenomenon of individual homeowners generating, storing and selling power using own means such as solar panels / roofs, power packs and electric vehicles.

Dell is criticized (unfairly perhaps) as the company that adds plastics to Intel hardware and Microsoft software and does not really control much of what's in the system. In contrast, people see the tantalizing possibility that Tesla can extract every ounce of value in the Tesla equipment (vehicle, battery packs, solar equipment …) 24x7 except the plastics because the entire stack - computer, the software and the battery - is controlled by Tesla and is accessible through intelligent software . Robotaxi clearly is an offshoot of this. I think this is the source of the excitement around Homeowner Utility also.

I am trying to understand the scale of Homeowner Utility though. I am assuming that the following are true:

• it is uneconomical for a homeowner to invest in power generation/storage much beyond their own energy needs since yield from selling power is so low compared to cost of buying power from utility (e.g. ~ $0.02/kWh vs. ~ $0.15/kWh - Pacific Gas and Electricity in California).
• When the cost of this production/storage goes down in the future, the utilities can still play the “owner of the pipe” card (like Comcast did against Netflix in the great interconnection/peering agreement battle of the last decade between dumb pipe owners and content owners) and extract their pound of flesh for outbound transmission from whatever economic value is created through this Homeowner Utility thus reducing the incentive for individuals to be aggressive about becoming micro utilities.

The total annual revenue from sale of electric energy in the United States is about $400B currently. Projecting this out to a number after making allowances for (i) worldwide (ii) growth say to 2030 (iii) only a portion of electricity use is residential and this represents the high watermark for Homeowner Utility production and (iv) only a fraction of that will be in play after the homeowner covers own energy needs - leads to the conclusion that the worldwide total market opportunity appears to be in the billions to tens of billions of dollars annually, not “trillions of dollars”.

This leads to:

• Homeowner Utility will have useful and novel applications (for e.g. mobile powersource - Cybertruck powering workers’ tools) but is too small by itself to transform the energy industry or generate big revenue for TE in proportion to rest of TE revenue opportunities or
• Homeowner Utility has some as yet unknown killer application that will act as a keystone species and exert a disproportionate, outsized impact on the energy ecosystem.

Why do others think the “everyone can be a utility” opportunity will be anything more than a niche compared to the much larger, colossal opportunities in front of Tesla Energy?

 

[MC3OZ]

Probably not too many stocks where a large portion of investors won't even consider selling after SP goes 10x within a year, and some (me) wouldn't even considering selling if it went 25x within a year.

This is the only part that may blindside the committee...

But IMO they are likely to ask for a secondary offering of 5 million to 10 million shares...

Assuming Tesla agreed, that would be another $5B to $15B in the bank..

Normally growth companies don't pay dividends as they need to plough all of their cash into growth.

However, when sitting on a cash balance of more than they need is the time when Tesla might consider modest dividends while still growing their enormous pile of cash.. and investing in rapid expansion...

If we consider a company rapidly expanding, sitting on a pile of cash, growing market share and revenues, making profits and paying modest dividends that will not in any way impact the pile of cash or expansion... i know which direction the share prices is likely to head.... and I'm not sure what arguments the bears have left.

We can also consider who dividends would reward, including Tesla employees, we can also consider who they penalise including shorts...

It isn't a big issue for me either way, but pragmatic decision making means, when there are multiple options on the table, consider all options on merit.

 

[dc_h]

I’ve been told that a stock where the company doesn’t do buybacks or dividends is worthless.

I guess this means I better sell all my AMZN then, it’s worthless!

In fact, let’s look at all the members of the infamous FAGMAN group:

Facebook - does not pay a dividend
Apple - pays a dividend
Google (Alphabet) - does not pay a dividend
Microsoft - pays a dividend
Amazon - does not pay a dividend
Netflix - does not pay a dividend

So, out of the 6 big tech companies, 4 of the 6 do not pay a dividend and are worthless! If only I knew, I would never have owned any of these companies and made so much money from their shares!

The present value of the stock is based on discounted future earnings. The company can build assets and be more valuable, like Berkshire Hathaway. At the end of the road, the idea is that the stock has a way to reward shareholders. Maybe that’s just appreciation, but normally it’s based on buybacks to make the stock more scarce and dividends to reward shareholders. No rule dividends have to be the reward, the value is technically discounted future earnings.

 

[InDaClub]

https://twitter.com/RandyVegetables/status/1286884470042308613?s=20

 

[traxila]

This might be a bit more informative:
Elon Musk's SpaceX in talks to raise funds at $44 bln valuation - Bloomberg News

Now if we can only find those people familiar with the matter then we'll have something!

Forge

 

[Krugerrand]

No options for 2022?

I think it makes more sense to start Cybertruck first. It's possible they'll be able to start both at the same time, but if not then I wouldn't expect Model Y deliveries from Texas to start until some time in 2022.

Nope. Much easier, faster and logical to go with a vehicle they are already making and expecting to be their best seller. Y is copy and paste and that factory can be pumping out vehicles way sooner, getting fat profits and paying for itself.

CYBRTRCK is all new technology and is going to take more time to figure out how to make, be efficient and turn profits. Bad idea to start with it first.

I chose Q32021 for volume production of Y. I think production can start as early as Q2 but not volume. Stamping is longest lead time and it can be done in a year’s time. The question then is can Texas build the factory in that time? We’ll see, but they’ve certainly started in earnest.

 

[Stretch2727]

With regards to dividends and buybacks.

This is a growth company that needs to keep every penny to grow as fast as possible. Cathy Wood at ARK invest has estimated they will will need $10B in capital moving forward. Hopefully it will be less but thanks to the high stock price this should be easy with minimal dilution.

Growth companies invest their capital to grow profits and income. This flows stockholder equity on the balance sheet. Profit, cash flow and future growth should be be the main measure of value of a stock. This is why we have P/E and PEG ratios.

If Tesla were to announce a dividend or buy back at this point I would seriously reconsider my investment. It basically means they have run out of ways to to invest profits and they feel it is better investors have these funds to use elsewhere. We are no where even close to this point with Tesla.

If you need dividend income find another stock. My guess is we are 10 years+ away from a dividend.

 

[Criscmt]

Looking for your helpful thoughts, greatly appreciate it.

Background

• Been HODLing TSLA for years, never sold a share. I care about Tesla’s mission. During the tough times (like 2018) at one point of time I told myself if the company goes down (to a more limited level in scope) I would see my losses as a contribution to the mission.
  
• Since the end of 2019 I have been buying LEAPs 1.5-2 years out.
  
• I have always avoided buying short term options, until now.
  • For someone with my low level of expertise in Options, I made the mistake of getting into short term options. My lack of knowledge included not understanding the IV Crush after earnings.
  • About a week prior to earnings, for a significant amount in my portfolio, I bought Jul-31 calls with breakeven of ~1800.

What to expect going into July-31?

• I am trying to assess how the price action leading to Jul-31 likely will be considering the factors that were seemingly at play on Jul-23rd and 24th.
• Market Makers (Options writers)
  • Strong view seems to be that at least part of last Thursday, Friday price action is attributable to Market Makers (Options writers) having more to gain by spending money on pushing the price down.
  • I am assuming this is influenced by the number of options bought. Here I am assuming, there must be enough options to make more money than the money spent to manipulate the stock price. If that’s the case, how can I find how the options volume expiring Jul-31 compares to the volume that expired on Jul-24.
  • I did check the max pain for July-31st, it’s at $1530. Is it right that more than the max pain it’s the volume that influences whether MMs should spend money on price manipulation?

Any steps worth considering, like hedging?

• Are there any steps worth considering which might be of help? Of course, I am asking for steps other than the step of doing nothing
• In other words, steps to hedge my Jul-31 calls to a meaningful extent? I do have significant exposure to Jul-31 calls, I don’t mind risking some amount for hedging.

[EDIT]
Historical IV levels of TSLA

1. For the next time around if I again buy LEAPs (not short term), may I know what IV level you think is not too risky to buy LEAPs at? And, how should I read the IV from historical IV level perspective, mean over a time window? IV Vs HV?

 

[MC3OZ]

Why do others think the “everyone can be a utility” opportunity will be anything more than a niche compared to the much larger, colossal opportunities in front of Tesla Energy?

IMO Tesla is likely to expand the energy product range for the home, the VPP/Autobidder ecosystem allows the homeowner to make a bit of money and save a bit of money, that acts as an incentive for the homeowner to buy Tesla products and be part of the VPP.

The VPP is just another way of providing storage, but does allow fine grained control of voltages is a local area....

It is more about Tesla becoming a diversified company with additional revenue streams, but the main advantage is selling products liek Powerwall to home owners.. and making some money from electricity storage and software..

 

[lafrisbee]

Tesla, Together Earth Still Loves All

Ha, THAT ain't true.
the "Earth" is constantly trying its hardest to kill us..and well it should. WE are the cancer of the planet...and Elon wants to metastasize mars.

 

[AZRI11]

Jason Jang and WuWa have new videos from Giga Shanghai.

Jason Jang:

WuWa:

Tesla needs to make a Garbage truck

 

[MC3OZ]

On Tesla insurance, even if Tesla was required to provide data to other insurers, that would potentially create more problems for those insurers than it would solve...

Because the key questions are :-

1. What is the format of the data?
2. Can existing insurance companies use this data?
3. Do they need to change their computer systems and business practices?
4. What are the privacy implications?
5. What portion of their motor insurance business are Tesla customers?

May be an insurance company has to treat insurance for Tesla cars differently, as they don't have data for other car brands...

Maybe they need to invest in expensive systems changes to support data for Tesla customers who are a small portion of their portfolio.

This isn't in anyway simple or straightforward for existing insurance companies...

If there was a court decision stating Tesla must provide the data, that decision needs to define the data content and format... getting to that point will not be a fast process.... other companies using the data will not be fast...

 

[lafrisbee]

I once received a jury summons letter that asked me if I understood the English Language. I checked No.

Then they wanted an explanation.. So I wrote a paragraph about how convoluted and non-logical the English language was and how I doubted even those with PHDs in english really understood the language.

The next time I received a jury form the question had been changed to do I consider myself fluent in the english language.

If a wooden box is a box made out of wood and a wood box is a box to hold wood, what is a cardboard box? And shouldn't it be a cardboarden box?

shouldn't that be a cardenboarden box?

 

[MC3OZ]

If you need dividend income find another stock. My guess is we are 10 years+ away from a dividend.

Not the case, I was suggesting a short term strategy only...
I've tried to explain the logic it is 100% pragmatic, and tied to S&P 500 admission.

However, I'm dropping it now.

 

[lafrisbee]

Thanks for the imput. Not too sure if 'hitting' works well as a metaphor, since their is literally no physical contact in modern AC electric motors. I also don't think 'phases' is a well enough understood concept to work for the general public. So maybe we keep working?

Cheers!

runnin' on all phases

 

[Mo City]

On Tesla insurance, even if Tesla was required to provide data to other insurers, that would potentially create more problems for those insurers than it would solve...

Because the key questions are :-

1. What is the format of the data?
2. Can existing insurance companies use this data?
3. Do they need to change their computer systems and business practices?
4. What are the privacy implications?
5. What portion of their motor insurance business are Tesla customers?

May be an insurance company has to treat insurance for Tesla cars differently, as they don't have data for other car brands...

Maybe they need to invest in expensive systems changes to support data for Tesla customers who are a small portion of their portfolio.

This isn't in anyway simple or straightforward for existing insurance companies...

If there was a court decision stating Tesla must provide the data, that decision needs to define the data content and format... getting to that point will not be a fast process.... other companies using the data will not be fast...

First off, I'm not a lawyer.

If the driver consents, I suppose Tesla might be required to provide the driving habits/details of individuals to a third party at some point in the future. The format and usability of the data would be figured out easily enough.

If Tesla insurance catches on and gains serious traction, it could upend not only the industry but driving habits in general. Every driver would be aware his car had a "black box" that determined their insurance cost.

Knowing Elon, rates will be strongly influenced by how often Autopilot is engaged.

 

[RobStark]

I’ve been told that a stock where the company doesn’t do buybacks or dividends is worthless.

I guess this means I better sell all my AMZN then, it’s worthless!

In fact, let’s look at all the members of the infamous FAGMAN group:

Facebook - does not pay a dividend
Apple - pays a dividend
Google (Alphabet) - does not pay a dividend
Microsoft - pays a dividend
Amazon - does not pay a dividend
Netflix - does not pay a dividend

So, out of the 6 big tech companies, 4 of the 6 do not pay a dividend and are worthless! If only I knew, I would never have owned any of these companies and made so much money from their shares!

All those companies will do dividends or buybacks within the next 100 years.