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

[CorneliusXX]

Tesla China put out a cool timelapse of the factory in action.

https://twitter.com/i/status/1299752012473491456

I'm surprised by how few people there appear to be on the factory line and how little inventory is laying around compared to older videos of Fremont. Below is a comparison from the Marquez tour - there's junk everywhere and people moving parts around by forklift, etc.

Maybe it's just a different part of the line but I think it's more likely that alien dreadnaught has progressed a long way - Tesla just doesn't mention it anymore after the issues with the Model 3 ramp.

 

[ammulder]

Only thought is that current Teslas do not allow for vehicle-to-grid aspect. Like, the boards on the chargers literally can only go one direction (power in, no power out). So if Tesla makes this change to the chargers (to allow V2G) we would have known by now. (Sandy Munro, etc. do teardowns)

Not saying it won't happen, but it will not be an OTA update and suddenly Tesla is a utility. It'll be a new hardware feature to come.

Well, the million-mile battery won't be an OTA update either, so they could roll these out together.

 

[Driver Dave]

with the splits this weekend...

it’s amazing how badly the brokers and apps are handling it.

Like many, with both AAPL and TSLA on two separate brokers I have split shares at previous price... for the last two days.

I mean these companies have one job.

manage the accounts.

and this sort of glitch where you see 5x the amount of money you have...

is just nuts.

and funny my retirement services that link with accounts all now show

you are doing amazing towards your retirement goal! Retire now!

 

[Prunesquallor]

You should say "maybe those rules aren’t optimal for you." It's a subjective risk/reward balance.

Dave's video @Artful Dodger linked to is one of his few I disagree with. He is basically saying that Tesla is infallible and you're crazy if you don’t invest 100% of your finances in them. I can think of a half-dozen (hopefully low-probability) black swans that would stop TSLA growth in its tracks. Do I want to bet 100% of my family's finances in TSLA? I do not. You may. That's fine. As I say, it’s subjective.

Dave also clearly does not understand the ARK TSLA assessment that he criticizes. The $7000 expected value is a statistical construct made up of many scenarios of various probabilities. Some of these scenarios assume a real probability of low growth. Dave seems to think that ARK is convinced of that valuation (100% certain) by the end of 2024, so diversification is a disingenuous tactic to make money from portfolio management fees. ARK's assessment actually gives that valuation a probability of less than 75%.

ARK gives some options for those of us who are uncomfortable with near-100% investment in TSLA. Their returns seems to be impressive, and the quality of their analysts is orders of magnitude higher than run-of-the-mill Wall St types.

I made a misleading statement above. ARK gives only around a 30% probability that 2024 (pre-split) SP will be $7K or higher, even though it’s their “expected value”.

 

[Right_Said_Fred]

And this still assumes that growth in 2021 and 2022 will be 50%. It seems to me that growth in both years will be 100% (so greater than 1 million production in 2021 and 2 million in 2022). This we can predict reasonably accurately from the progress in Shanghai, Berlin and Austin and that Tesla will be production constrained with Model 3, Model Y and Cybertruck, especially with expected cost reductions due to economies of scale, learning curve and localised production.

If we assume higher growth for the next two years then reverting to 50% growth, then we get his predictions pulled forward by about 1.5 years, to mid 2026.

What this means for the share price is that the discounted price would be above $2000 at 10x P/E multiple, at higher multiples (a case can be made for 50x P/E multiple) this could lead to share prices all the way up to $10,000.

This seems incredible, perhaps I have made a mistake (?!?!).

A possible mistake in your assumption is that you revert back to a 50% growth rate after two years of 100% growth. That may be too optimistic, as 50-50-50-50-50 cannot simply be replaced by 100-100-50-50-50. More likely is something like 100-100-40-40-30.

Note: Tesla (Elon) is not guiding for an average of more than 40-50% compounded growth over the next five years. His predictions on FSD may be off, on total production he is more accurate: Elon was spot on when in 2015 he predicted production of 500,000 cars in 2020.

Also, be aware that the market is forward looking. PE for this year is about 200-400 ($1-2 billion profit versus $400 billion valuation). For PE to get to 50 we need $8 billion profit, which will likely take another 2 years (2022). And at the current valuation a PE of 20 (a profit of $20 billion) will probably only be reached in 2025. This means the market is already looking ahead several years with the current valuation. An SP of $10,000 at this moment is very unrealistic; the market does not look 6-7 years ahead, as there are too many uncertainties over such a long period.

 

[Opus BC fan]

My TDAmeritrade account split the shares but kept the original price. I wasn't expecting to see those numbers for a few more years.

 

[Hock1]

I am in Quebec with Disnat and the message I received yesterday on the split sounds like they will need to run after some shorts and it might even take a few days, if they manage to catch them which they are not sure either!

Following the split on TESLA (TSLA-U) shares on August 31st, 2020, you will receive of 5 new shares for 1 old share. We should receive de shares within a few business days following the split date. Should you wish to trade these shares next week, please call our Customer Service at 1.866.873.7103 and chose option 2. Thank you.

Hah! That's nothing! How's this for an attempted fraud? (personal details redacted)



Imma say, it's easy to see who the bad actors are now. "Phone us if you need to sell". This brokerage is obviously hoping to buy shares beginning Monday morning to replace the ones they should be receiving from the Transfer Agent. Would have too, if their 'sold' share count matched the records at the Transfer Agent...

And what's this new B.S. about "Temporary Shares" that you can't sell online? This Broker is quite obviously trying to ration out the few real shares they actually hold (obviously way less than 20% of their obligations to "beneficial holders"). Is this funny money? Why don't they just pay in Reichsmarks? I hear they're plentiful now.

Cheers!

This could turn out to be a real cluster. I've been waiting for more than 10 years for some event to shine light on the criminal enterprise known as manipulative short selling and "staying short" (i.e., not delivering shorted shares). With today's financial technology, there is absolutely no reason the delivery of the dividend shares can't be done by Monday, assuming that all shares currently held in the system are authentic shares. Which to me, they are clearly not. This is going to be very interesting to watch.

 

[NicoV]

and funny my retirement services that link with accounts all now show

you are doing amazing towards your retirement goal! Retire now!

Are you sure that has anything to do with those stock splits?

 

[Singuy]

So what you guys are saying that Robinhood is the only brokerage competent enough to have fixed their glitch just hours later yesterday? Whaaaaaat

 

[Singuy]

A possible mistake in your assumption is that you revert back to a 50% growth rate after two years of 100% growth. That may be too optimistic, as 50-50-50-50-50 cannot simply be replaced by 100-100-50-50-50. More likely is something like 100-100-40-40-30.

Note: Tesla (Elon) is not guiding for an average of more than 40-50% compounded growth over the next five years. His predictions on FSD may be off, on total production he is more accurate: Elon was spot on when in 2015 he predicted production of 500,000 cars in 2020.

Also, be aware that the market is forward looking. PE for this year is about 200-400 ($1-2 billion profit versus $400 billion valuation). For PE to get to 50 we need $8 billion profit, which will likely take another 2 years (2022). And at the current valuation a PE of 20 (a profit of $20 billion) will probably only be reached in 2025. This means the market is already looking ahead several years with the current valuation. An SP of $10,000 at this moment is very unrealistic; the market does not look 6-7 years ahead, as there are too many uncertainties over such a long period.

Elon also never guided for 10 billion in profits either. I am assuming profits will hover around 2-3 billion a year when he said Tesla will be profitable but just a "small profit".

 

[lafrisbee]

Elon also never guided for 10 billion in profits either. I am assuming profits will hover around 2-3 billion a year when he said Tesla will be profitable but just a "small profit".

so the piggy bank grows by $2,000,000 every year? in 10 Years the company will have $20,000,000 laying around?

 

[Zythryn]

So what you guys are saying that Robinhood is the only brokerage competent enough to have fixed their glitch just hours later yesterday? Whaaaaaat

As of yesterday my Schwab account showed the correct, post split, price and quantity.

 

[Zhelko Dimic]

Hah! That's nothing! How's this for an attempted fraud? (personal details redacted)



Imma say, it's easy to see who the bad actors are now. "Phone us if you need to sell". This brokerage is obviously hoping to buy shares beginning Monday morning to replace the ones they should be receiving from the Transfer Agent. Would have too, if their 'sold' share count matched the records at the Transfer Agent...

And what's this new B.S. about "Temporary Shares" that you can't sell online? This Broker is quite obviously trying to ration out the few real shares they actually hold (obviously way less than 20% of their obligations to "beneficial holders"). Is this funny money? Why don't they just pay in Reichsmarks? I hear they're plentiful now.

Cheers!

I think you're misinterpreting this. My brokerage does similar with ghost shares, and that's typical way they handle split, for all stocks. They won't have real Tesla's dividend shares delivered to them by Monday morning, it takes time for them to be delivered to brokerage trough the transfer agent, registered, and appropriately assigned to owners. My brokerage expects to have them in my account before trading on Wed. morning, heard others Thursday. Those differences probably reflect various efficiencies of broker's internal processes. I would think they get real shares sometime on Monday, maybe Tuesday if transfer agent sucks. By promising Wednesday they build a buffer for themselves.
So, they assign ghost shares in the meantime that are placeholder, so your margin etc. doesn't get affected. If you sell all on Monday, they will actually lend you some shares from their own portfolio, which they haven't received yet, so that's likely reason they want you to call. If you sell everything on Monday, they may be actually creating naked short position (temporary) to accommodate you.

And yes, their software/processes mostly suck. However, historically they haven't had this kind of excited and demanding customer base, so no incentive to get better...

 

[bhtooefr]

Looks like Robinhood updated the options positions last night, and also got them right.

 

[MikeAtkinson]

Tesla China put out a cool timelapse of the factory in action.

https://twitter.com/i/status/1299752012473491456
View attachment 582345

I'm surprised by how few people there appear to be on the factory line and how little inventory is laying around compared to older videos of Fremont. Below is a comparison from the Marquez tour - there's junk everywhere and people moving parts around by forklift, etc.

Maybe it's just a different part of the line but I think it's more likely that alien dreadnaught has progressed a long way - Tesla just doesn't mention it anymore after the issues with the Model 3 ramp.

View attachment 582346

The twitter text "We do better than we promise!" seems to imply that they have exceeded 4k per week.

Even though it shows a much cleaner factory, you can see where Elon is going with his volumetric efficiency and desire for more speed. There is still a lot of wasted space, both floor area but more significantly volume. Note how the robots seem to be active only about 50% of the time and they actually only take up a small volume of the entire plant. The alien dreadnaught has progressed but still a long way to go.

 

[Nocturnal]

Only thought is that current Teslas do not allow for vehicle-to-grid aspect. Like, the boards on the chargers literally can only go one direction (power in, no power out). So if Tesla makes this change to the chargers (to allow V2G) we would have known by now. (Sandy Munro, etc. do teardowns)

Not saying it won't happen, but it will not be an OTA update and suddenly Tesla is a utility. It'll be a new hardware feature to come.

Not just that. If you can buy a Cybertruck for 69k (yeah I know) with V2G, that 100-150? kWh battery can do the work of 10+ power walls.

This is huge and few seem to be paying attention. That’s before the other implications of net metering, auto bidder etc.

 

[anthonyj]

IM RICH

 

[ggr]

Elon also never guided for 10 billion in profits either. I am assuming profits will hover around 2-3 billion a year when he said Tesla will be profitable but just a "small profit".

There will come a point where it becomes impossible for Tesla to keep the profit low. They would be undercutting everyone else in the market and on the way to being a monopoly supplier, which doesn't further the goal of transitioning to sustainable energy as well as allowing (some) competition to survive. It's like when Microsoft invested in Apple to keep them alive.

 

[Zhelko Dimic]

I used to be invested in ARKK. Then I found out they are high on cr...er.. crypto. Sold immediately. As Elon said on the ARK podcast, the amount of electricity used up for mining bitcoins is a big problem.

I get this. And I agree. However, my belief is that society will tolerate hugely inefficient processes to provide some services.

Just think about number of lawyers in US, as compared to most other countries, mess of medical health care that US has - billing dept., inflated invoices, insurance, negotiators, hospitals for profit etc. - most of which do not exist elsewhere, or all of the financial industry related to markets (traders/brokers/market makers), ALL of that to provide simple ability to young companies to get access to capital for growth.

In this last example, only that last activity is value add to society, and yet, it's probably only few percents of everyone else making money of markets. The rest are there to provide liquidity and are value neutral - to society. So they're overhead of providing function, the same way that electricity consumption and miners are for the bitcoin. This is the new service though, so will it be accepted to society as valuable is still unclear.

 

[Tes La Ferrari]

1) For the Cathie Wood defense of her Portfolio Management strategy, look upthread a day or so for a post from @Artful Dodger

2) Not attacking ARK, just point out that how her firm manages portfolios may not be optimal. It depends on your goals, objectives, and risk tolerance, among other things. Remember, I said "interesting" - I was hoping to spark further discussion on portfolio management, not that she is wrong.

3) Just because they load up on TSLA doesn't mean their portfolio wouldn't have some value. Since they understand the business so well and have multiple analysts looking at it daily, they might be able to spot trends, hiccups, roadblocks, or new opportunities faster than an individual investor.

4) You're wrong that "following Buffett's strategy" means investing now in the same companies he has in the past. His STRATEGY is to invest in businesses you understand, that are resilient to competition, etc. As I clearly pointed out, the companies HE understands are different than the companies WE understand.






See point #3, above. I'm not saying her entire fund should be Tesla. I'm not even saying she should change her firm's rules. I'm saying that maybe those rules aren't optimal, and providing opinions from another successful investor as counterpoint.

Does ARK trade employ any options strategy of any kind with TSLA or do they just trade in and out if shares?

Was thinking - if they are really solid options performers they might provide value to TSLA investors who don’t trade options to have the diversity of TSLA options being traded for them by a professional who believes in the TSLA business case.