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

[Prunesquallor]

A COVID-19 Vaccine Might Not Be Approved Until 2021, and more

Quick note by Sam Korus in latest ARK newsletter (emphases mine)

"During Tesla’s second quarter earnings call, Elon Musk claimed that the standard EPA range for electric vehicles (EVs) will be 300-miles, well above that for most EVs in the market today. ARK’s research suggests that incumbent automakers will not be able to compete with Tesla on traditional metrics like range and performance at any given price point. Perhaps their survival will depend on their ability to create neighborhood electric vehicles or electric bikes."

 

[wtlloyd]

I agree that the bull market will continue for a few more months since Trump needs that for re-election. My fear is that if he loses then he'll let the market tank so he can say 'See, I told you Biden would ruin the stock market. Investors are already panicking.'

If that is the least Trump does WHEN he loses, I'm good.

 

[MikeAtkinson]

Haven't seen this posted - UK electricity grid's carbon emissions could turn negative by 2033, says National Grid

My view: Not keen on carbon capture compared to reducing use of fossil fuels. Cryobattery can remove CO2 easily - not sure what to use it for except current purposes eg soft drinks and beer. Vehicles will be dominant well before 2033. Heat pumps are a great idea (UK may suit air source as it's rarely that cold). I'd love a Tesla home with HVAC and intelligent all-electric heating. I can live without cooking on gas - as I don't like the leaks in the distribution system.

"Carbon emissions from Britain’s electricity system could turn negative by as early as 2033 if the UK uses carbon capture technology alongside more renewable energy to reach its climate targets, according to a report from National Grid.

The electricity network operator on Monday set out its vision for an “emissions negative” grid that would include 30m electric vehicles on UK roads, and 8m heat pumps used to replace gas boilers in energy-efficient homes.

In National Grid’s most progressive vision for Britain’s pathway towards its 2050 climate targets it claims that net carbon emissions from the electricity sector could turn negative within 13 years by using carbon capture technology alongside bioenergy sources."

'E-highways' could slash UK road freight emissions, says study - dumb unless it's rest areas or short stretches. Almost designed to discredit EVs.

My view: Not keen on carbon capture and storage in the UK either. We have relatively little biomass for electricity production, most of the biomass used at present is imported from USA and Scandinavia (e.g. for Drax), it is much better that this is burnt local to production to avoid energy usage in transportation.

Air source heat pumps are great for the UK, I am looking to have one fitted soon as part of our house refurbishment. We have a property that should be suitable for one, however they are going to be hard to retrofit into lots of UK houses. 8 million heat pumps by 2033 is going to be a stretch.

 

[mongo]

OT CT SS

Yes. Thank you. I know that. And Elon has specifically said they rolled the SS 30x 30 times.

No. I can’t recall if it was a tweet or a comment he made in an ER call that was later repeated in an article. But we went through the same confusion back then if 30x was the material or 30 times rolled.

Elon response to the question 'is it 300 series or 30 times harder?':
Twitter

Good question. It’s a new variant of 300 series stainless steel, but it also gets cold-worked many times, depending on kilotonnage of press.

I read this as not 30 times.

 

[S3XY]

If you lose an election you also lose your power. And Trump is not wealthy enough to have market moving power based on wealth. So it's not clear how Trump could tank the market if he loses. That doesn't mean it won't tank if he loses, just that it won't be his doing if it does. Personally, I think it's more likely to tank if he wins.

He has two months left to serve after the election. What's happened in the past whenever he even mentions new tariffs on China? What if he threatens a war with Iran (although this was Bolton's life ambition)? He has enough sway on Powell to have him lower interest rates during a good economy where common practice is to raise rates in good times so you have some ammunition in reserve when things go bad. He could even wield his twitter account to spook the market. I'm afraid there's plenty he could do during those two months.

 

[elasalle]

He has two months left to serve after the election. What's happened in the past whenever he even mentions new tariffs on China? What if he threatens a war with Iran (although this was Bolton's life ambition)? He has enough sway on Powell to have him lower interest rates during a good economy where common practice is to raise rates in good times so you have some ammunition in reserve when things go bad. He could even wield his twitter account to spook the market. I'm afraid there's plenty he could do during those two months.

Lame Ducks don't count do they? All depends on who wins.
Further, if it's a Blue wave, Senate is also up for grabs ...

 

[Krugerrand]

Ok so 8.6 minus the reserve then they have available to expand is that less equal or greater then 8.6 billion?

Now whatever they have left for expansion is that the optimal amount? If they had more would the value of tesla grow more then the new cash or not?

Sorry, now I’m lost more than ever. Not your fault, so can you clarify please?

I thought you’re original point was an argument for more cash on hand. I asked how much you felt they needed. You said 4 billionish. I said but they’ve already got 8.6 billion. Now you’re talking about 8.6 minus a ‘reserve’. I’ve no idea what that means.

All I was asking was how much in total you felt they should have on hand, since you felt what they currently have (8.6) isn’t enough. Do you mean they should have 4 billionish more making a grand total of 13 billionish? That’s the amount you’d be comfortable with them having on hand?

 

[StealthP3D]

The USD is weakening substantially.

Started at DXY 97.196 and currently sitting at 93.928. a 3.4% weakening.
So, with my r/wallstreetbets level of due diligence I'm predicting this translates into a ~80m$ gain if this level holds through the quarter.

Above is as close as we can come to a garbage in, garbage out analysis. But it's at least a framework that's useful for thinking about how USD movements affects Teslas Q3.

Elon's thinking on hedging in general aligns with mine - it's a waste of time and resources. You should only hedge risks that are near catastrophic. It's a loser's game - only the banker types win, on average. This is demonstrated by his willingness to self-insure Tesla's BoD up to $100 million using his own money.

If there is a bet to made, and the odds are in your favor, and you can afford to lose the bet, TAKE THE BET! I love this about Elon. It's so sensible and pragmatic and exactly how I see things. In the case of insurance and currency hedging, you don't even need to waste your time doing the math and calculating the odds. The reason being that greedy little banker types have already done it for you. They are not stupid and will ensure the odds are always against you and in their favor (unless, of course, they make a mistake).

This can be applied to investing. Never hedge your bets unless you are foolish enough to be making the kinds of bets you can't afford to lose. Hedging costs a lot of money and is just one more thing the "house" encourages to create a higher "take" for themselves. If you are not taking risks that would be catastrophic in the aggregate, you don't need to hedge. This will, over time, increase your returns.

And, yes, this looks to be a very nice tailwind going into Q3.

 

[UkNorthampton]

My view: Not keen on carbon capture and storage in the UK either. We have relatively little biomass for electricity production, most of the biomass used at present is imported from USA and Scandinavia (e.g. for Drax), it is much better that this is burnt local to production to avoid energy usage in transportation.

Air source heat pumps are great for the UK, I am looking to have one fitted soon as part of our house refurbishment. We have a property that should be suitable for one, however they are going to be hard to retrofit into lots of UK houses. 8 million heat pumps by 2033 is going to be a stretch.

I saw somewhere - 'Fully Charged'? That someone is making a heat pump boiler for replacing or augmenting a gas boiler. I guess if the input to the gas boiler is hot enough, the gas boiler doesn't kick in. Personally, I can see in a future house (less likely this one, possibly as part of a major refurbishment) not having gas at all.

Gas is nice for cooking, but if it can be avoided you save the standing charge (daily charge irrespective of usage) and distribution losses.

From an out-of date article

"Typical standing charges range from:

• electricity – 5p to 60p per day
• gas – 10p to 80p per day"

I can't remember what we pay. Looks like Octopus is/was 19p per day - so roughly £6 per month - £72 / yr. In summer our gas standing charge is often higher than our usage.

 

[Krugerrand]

Hmm, I'm in the camp that believes Tesla made at least one whole CYBRTRCK, including all the body panels it contained. I guess you're in the camp that it's just a CGI fake

You knew what I meant but I gave you a funny anyway for the attempt at humor.

 

[The Accountant]

The USD is weakening substantially. I'm not gonna pretend to be a currency expert but the current US monetary and fiscal policies probably have a thing or two to do with it.

Tesla is exposed to currency fluctuations per their 10K and recent 10Q.

10Q from 2020 Q1:

Interest rate risk is negligible:

Worst case adverse move of 10% results in ~300m$ loss. I'm unsure whether this is computed as a simple 10% gain/weakening of the USD or as individual worst case moves of individual currencies that happen to be good/bad for income. Ie. 10% gain in a currency vs usd where tesla has a net debt and a 10% drop in a currency vs usd where tesla has a net inflow.
Maybe @The Accountant can chime in?

The flipside of that should obv be that a favorable 10% move results in ~300m$ of income. So worth a glance.

it seems to me that on average tesla should gain positive income from dollar weakness unless the timing with EUR and CNY debt facilities has been bad. But we would expect bigger debts to be currency hedged, no?
While revenue streams are less likely to be hedged.

Dollar index DXY Q1 started 96.442 and ended 99,048. 2.7% strengthening.

In Q1 strengthening translated into a 54m$ loss.

Dollar index, DXY started Q2 at 99.048 and ended at 97.391. 2.2% weakening.

Will have to wait for 10Q to confirm whether this weakening translates into an income gain. VERY simple prediction is that it should have translated into a ~45m$ gain.

I started trying to back out individual currency fluctuations in the quarter but ... you know... too much work.

So how is Q3 panning out?

Started at DXY 97.196 and currently sitting at 93.928. a 3.4% weakening.
So, with my r/wallstreetbets level of due diligence I'm predicting this translates into a ~80m$ gain if this level holds through the quarter.

Above is as close as we can come to a garbage in, garbage out analysis. But it's at least a framework that's useful for thinking about how USD movements affects Teslas Q3.

Thanks - you're highlighting one variable I have not paid too much attention to for Q3. We should see a benefit to Tesla's financials with the weak US Dollar.

 

[Tslynk67]

OK, seems some buyers turned-up

I was watching the ticker, and it went from $1429 to $1447 in a single step, impressive!

 

[elasalle]

 

[vikings123]

If you are wondering about the reason for the morning spike look no further. I present to you GLJ!

"Tax" credits lol, I don't think any of these guys really understand what these credits are about.

 

[bhtooefr]

I didn't see anyone pick up the short interest report from Friday (although I did fall behind on the thread due to an online event that took most of my mental bandwidth, and had to skip forward), so I'll post here.

As of 2020-07-15, 12,710,428 shares sold short, for $19.65B at risk. The $15B hypothesis has fallen, I'd say.

Ihor didn't post an estimate on the 15th - or even close to the 15th - but I got the estimate out of his graph on the 20th... he nailed it this time. 0.05% error, and that's more than the error in my measuring the graph. Either the market that two week period behaved in line with how S3's model works, S3 updated their model to model TSLA more accurately, or S3 just got lucky. (I suspect it's either the first or last one, but.)

 

[S3XY]

Lame Ducks don't count do they? All depends on who wins.
Further, if it's a Blue wave, Senate is also up for grabs ...

I hope you're right. But his natural reaction to being wronged is to lash out at whomever wronged him. But enough of my doomsday predictions. Market is about to open.

 

[Drax7]

If you are wondering about the reason for the morning spike look no further. I present to you GLJ!

"Tax" credits lol, I don't think any of these guys really understand what these credits are about.

Why are his views even presented, what’s CNBC agenda .
This looks premeditated.
Let the market place of investment ideas discredit his falsehoods.

 

[Krugerrand]

If you are wondering about the reason for the morning spike look no further. I present to you GLJ!

"Tax" credits lol, I don't think any of these guys really understand what these credits are about.

Wow, he’s super excited, huh? Prime example of ignorance being bliss.

He could work on his French a bit.

 

[Tslynk67]

If you are wondering about the reason for the morning spike look no further. I present to you GLJ!

"Tax" credits lol, I don't think any of these guys really understand what these credits are about.

Poor Gordon's going to have an aneurysm when Tesla announce $1b profit in Q3, without ZEV credits...

 

[hacer]

Remember that dividends are taxed twice, first a corporate income tax and second as income/capital gains to the shareholder....

This is a bogus right-wing talking point. You may as well say that salaries paid to employees of companies are double-taxed (actually taxed to the Nth power) because purchasers of the sold goods or services have already paid taxes on their income used to pay for them.
Generally speaking, money is taxed whenever it changes hands. The wealthy already have all sorts of special exceptions carved out for themselves to minimize or eliminate taxes when it flows into their hands but it's never low enough to satisfy them so they spout this BS.