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

[jpsgoneev]

Tesla is in a knife fight with the fossil fuel industry. No more, no less. A fight to the end.

I’m not implying any conspiracy — only the endowment effect.

Understanding the Endowment Effect

In behavioral finance, the endowment effect describes a circumstance in which an individual places a higher value on an object that they already own than the value they would place on that same object if they did not own it. Endowment effect can be clearly seen with items that have an emotional or symbolic significance to the individual. Sometimes referred to as divestiture aversion, the perceived greater value occurs merely because the individual possesses the object in question.

The fossil fuel industry will fight with all they can, at every instance.

Tomorrow, I will find someone that has never driven a Tesla and let them drive my car. Every time I do this, I discover a new convert. It is my way of fighting back.

Winston Churchill said: “I like a man who grins when he fights.”

“I like a man who fights back with a Tesla grin.”
JB Leonard

I couldn’t agree with this more. Also, I cannot wait until the Changing of the Guards.
Thankfully, it has begun. Elon’s at the leading edge of that change.
I hope/expect to be here when it all comes down.

 

[[email protected]]

A comment from the cheap seats: in essence, two factors drive TSLA's value: TSLA's full spectrum, unequaled performance with all that that implies (and it implies a lot!), and the market's consistent negative mis-pricing of its value. But for that consistent mis-pricing, my port would not have an average $315 (pre-split) share price. It seems to me the after hours is a perfect illustration: nothing whatsoever substantive changed (being in the SP 500 today versus 6 months from now does not affect Giga Fremont/Shanghai/Berlin/Austin output one iota or anything else), but the share price fell dramatically. The reasons why are probably simple, prosaic and emotion driven...but for some reason, a buyer can get a share for 7 percent less than at the close. Amazing and a mispricing gift for buyers to fill out their ports. MTCents J

 

[Joesantelli]

I can't sleep I just can't believe they didint add tesla. They have to add them on Tuesday this is so dumb.

 

[CanadaEV]

That makes no sense.

Tesla is still in charge of what price the shares sell at - there's no need to pull the offering - they will sell the shares when the price makes sense.

Exactly. I don't know why people are looking at it as a capital raise or an offering, etc. Tesla simply said, 'We might or might not be selling $5B of our stock at some indeterminate time in the future if it suits us to do so."

That $5B in shares is not available to anyone... actually, it's quite similar to inclusion in the S&P500 not being available to anyone until the committee decides... In fact, Tesla may well be saying, 'Two can play that game.'

 

[eloder]

For TSLA stockholders the hope is that an S&P inclusion will bring some stability to the price action

I think this deserves to be repeated for people who think not being included is a good thing.

Also I think it's important to keep in mind that we were at about 200 post-split before the prospect of the 4th quarterly profit (and thus, inclusion) was solidified. We weren't even at 300 post-split when the stock split was announced (which, again, reinforced people's beliefs of S&P inclusion). I believe in TSLA long-term, but I'm also preparing for a big drop if S&P inclusion does not happen. If S&P can deny TSLA entry even after meeting requirements, why would they ever grant TSLA entry in the future? We would have a long road to make today's valuation even remotely close to fair without the prospect of S&P entry. Just the slightest prospect of S&P index funds not buying from the fair open market caused one of the biggest one-day absolute point drops ever including pre-market in TSLA history and continued into one of the biggest sell-offs by % in the company's history over a three day period (with the assistance of macros in subsequent days). What sort of sell-off happens if zero S&P index funds are set to come in? We'd be back to where we were before 4th quarterly profit was a high-probability event. I'm afraid the momentum might even carry us lower than that.

There's also little things here and there that may bring further bad press and momentum. Remember the Snake jazz & Polynesian music tweet? Musk's brother selling at the very peak of the stock price? I would be very surprised if these don't come back to haunt the stock price in some way.

Also, what was shown at Autonomy Day was downright incredible. The market still didn't care much. I highly doubt Battery Day will do much short-term, investors don't seem to care until the technology is actually bringing in a profit (and not just revenue).

Not an advice, make sure you're comfortable holding long term or you may want to take appropriate action in the short-term. I'm still deciding on whether I want to go with protective puts or what. There are good catalysts after September ends, but I don't think they will make up for some of these pain points.

 

[Darren12]

Sorry but this is just not true look at Gary blacks last tweet there have been incidents that multiple releases have happened staggered

The other incidents last year after the rebalancing were changes made because of mergers and acquisitions, or spinoffs of companies already in the index, so the committee had to make the changes after the rebalance due to the timing of the events. See the excerpts below:

NEW YORK, Sept. 17, 2019 /PRNewswire/ -- CDW Corp. (NASD: CDW) will replace Total System Services Inc. (NYSE: TSS) in the S&P 500 effective prior to the open of trading on Monday, September 23. S&P 500 constituent Global Payments Inc. (NYSE: GPN) is acquiring Total System Services in a transaction expected to be completed after the market close today.


NEW YORK, Sept. 20, 2019 /PRNewswire/ -- S&P Dow Jones Indices will make the following changes to the S&P 500, S&P MidCap 400, and S&P SmallCap 600 effective prior to the open of trading on Thursday, September 26:

• NVR Inc. (NYSE: NVR) will replace Jefferies Financial Group Inc. (NYSE: JEF) in the S&P 500, and Jefferies Financial Group will replace NVR in the S&P MidCap 400. Jefferies Financial Group is spinning off its holdings in Spectrum Brands Holdings Inc. (NYSE: SPB) and post spin-off, Jefferies Financial Group will be more representative of the mid-cap market space. Spectrum Brand Holdings will not be added to the S&P Composite 1500 at this time.

NEW YORK, Sept. 26, 2019 /PRNewswire/ -- S&P Dow Jones Indices will make the following changes to the S&P 500, S&P MidCap 400 and S&P SmallCap 600:

• Las Vegas Sands Corp. (NYSE: LVS) will replace Nektar Therapeutics (NASD: NKTR) in the S&P 500, and Nektar Therapeutics will replace Sotheby's (NYSE: BID) in the S&P MidCap 400 effective prior to the open of trading on Thursday, October 3. BidFair USA LLC is acquiring Sotheby's in a transaction expected to be completed soon pending final conditions. Nektar Therapeutics is ranked near the bottom of the S&P 500 and has a market capitalization more representative of the mid-cap market space.

After these, there weren’t any changes until near the end of November, when there were two more changes in a couple weeks for similar mergers and acquisitions and spinoffs. Aside from quarterly rebalancings and these other events, the only time they made a change in the last year without an event involving a company already in the S&P 500 was adding Dominos Pizza in May 2020 shortly after their Q1 earnings report.

Also for all of the moves they made in the past year, they were moving companies from the S&P 500 to the S&P MidCap 400, so it seems that S&P 400 companies are their preferred choices when it comes to moves. The S&P 400 is supposed to be for companies between $2-$8B market cap, so there’s no way Tesla gets added there first.

Overall, unless there are some mergers and acquisitions in the next few weeks, and the committee decides that is how/when they want to add Tesla in (and add them in at the acquired companies weighting), I think we will be waiting until Q3 earnings call, which hopefully should be enough to convince the committee they should not wait any longer.

 

[engle]

Jim Cramer is a controversial figure who plays to his audience for ratings, but this video IMHO is very appropriate to $TSLA. I wish I saw it before we hit $500 recently:

- Video - TheStreet

Cramer: "So many times during my 40 years on Wall Street I have seen moments where stocks went up SO MUCH that you were intoxicated with gains. It is precisely at that point of intoxication though that you need to remind yourself that bulls make money, bears make money, but pigs get slaughtered."

Of course, I am in no way "slaughtered" with an average post-split cost basis of $30.

Next time there is another "panic buying" episode I shall sell about 30% of my total position in Roth IRAs (non-taxable). If I never get to buy-in lower with lots of extra shares, I will still be a "happy fat pig" booking those incredible gains, and riding the remaining large position to the Moon!

I had thought about cashing in only 10% recently near the highs, but the damn Stupid & Pathetic(sic) Index Committee froze my hand in anticipation of $TSLA's rightful addition to their lame index. Now we shall see what surprises "Battery Day" brings in 18 days and the market's reaction to them...

 

[Joesantelli]

I really think we revisit low 300s this week unfortunately the s&p hype has been enormous with tesla not included going to really suck the wind out of alot of investors

I pray for a Tuesday after hour inclusion but not sure it'll happen

 

[Tslynk67]

I expected more of a price drop, HOWEVER, I don't personally think much of the run-up was S&P front-running, why? Because the SP dropped after earnings when they became eligible, and was held down until the split was announced.

Now to historical some facts, September is a busy month for those poor, over-worked SPY guys. Look, multiple announcements spread over several days/weeks, no single consolidated S&P 500 statement.

So no, we can't read anything into this, yes, could very likely come on Tuesday, or Wednesday, Thursday, even after Battery Day, etc.


Sep 26, 2019 - 5:15 PM: Las Vegas Sands Set to Join S&P 500; Nektar Therapeutics to Join S&P MidCap 400; The Pennant Group to Join S&P SmallCap 600

Sep 24, 2019 - 5:15 PM: Pacira BioSciences Set to Join S&P SmallCap 600

Sep 23, 2019 - 5:15 PM: Fresh Del Monte Produce and Jagged Peak Energy Set to Join S&P SmallCap 600

Sep 20, 2019 - 5:15 PM: NVR Set to Join S&P 500; Jefferies Financial Group, II-VI to Join S&P MidCap 400; Callon Petroleum, PriceSmart to Join S&P SmallCap 600

Sep 17, 2019 - 5:15 PM: CDW Set to Join S&P 500

Sep 16, 2019 - 11:30 AM: S&P 500 buybacks decline significantly in Q2 2019; expenditures still remain higher than the pre-2018 levels

Sep 12, 2019 - 5:15 PM: Park Hotels & Resorts Set to Join S&P MidCap 400; Inogen to Join S&P SmallCap 600

Sep 6, 2019 - 5:15 PM: S&P Dow Jones Indices Announces Nine Companies Set to Join S&P MidCap 400; Ten Companies to Join S&P SmallCap 600

Sep 25, 2018 - 5:15 PM: Rollins Set to Join S&P 500; Inogen to Join S&P MidCap 400; Vanda Pharmaceuticals and Garrett Motion to Join S&P SmallCap 600

Sep 13, 2018 - 5:15 PM: Realogy Holdings Set to Join S&P MidCap 400

Sep 11, 2018 - 5:15 PM: WellCare Health Plans Set to Join S&P 500; HealthEquity to Join S&P MidCap 400; Laredo Petroleum to Join S&P SmallCap 600

Sep 10, 2018 - 3:04 PM: Update: Weight Watchers International Set to Join S&P MidCap 400; KLX Energy Services Holdings to Join S&P SmallCap 600

Sep 7, 2018 - 5:15 PM: Weight Watchers International Set to Join S&P MidCap 400; KLX Energy Services Holdings to Join S&P SmallCap 600

 

[Tslynk67]

I really think we revisit low 300s this week unfortunately the s&p hype has been enormous with tesla not included going to really suck the wind out of alot of investors

I pray for a Tuesday after hour inclusion but not sure it'll happen

Gave you a disagree because I see no reason for the stock to drop further, nothing changed fundamentally, Tesla get stronger with every passing day.

People selling on this are just speculating.

Battery Day might fly over the heads of Wall Street, but Q3 P&D will shock quite a few, then earnings will put the regulatory credits narrative to bed.

 

[RobStark]

Germans bought more than 2x e-Golfs than Model 3s. Not ID.3 but e-Golfs.

Germany In August — Electric Vehicles Crushing It At Record 13.2% Market Share

 

[Phil Seastrand]

Check this out: https://twitter.com/VGrinshpun/status/1302100259674390530

Looks like Consumer Reports is stooping to new lows as they falsify their reporting to make FSD look bad.

 

[Joesantelli]

Gave you a disagree because I see no reason for the stock to drop further, nothing changed fundamentally, Tesla get stronger with every passing day.

People selling on this are just speculating.

Battery Day might fly over the heads of Wall Street, but Q3 P&D ill shock quite a few, then earnings will put the regulatory credits narrative to bed.

Well I hope your right but after the run up we had and amount of investors who had the optimism of s&p 500 inclusion


When the headlines continue to hit on Monday of tesla not being included as much as I agree the run up wasint only because of the s&p I think it will have a negative impact I REALLY won't be suprised to see below 350 this week. If macros don't play nice even more reason to think so.

Anyways I hope I'm wrong again im just speculating.

 

[Artful Dodger]

A thousand pardons goddess of felines, but I must insist we hold out until Tuesday! The prophecy(and the Europeans not being able to front-run stock access) demands it!

Whadyamean? NASDAQ:TER was up 2.27% After-hrs. Traded nearly $22.3 MILLION DOLLARS!!

GANNA BE NUTZ IN FRANKFURT come Monday (the horor).

/S

 

[Joesantelli]

I expected more of a price drop, HOWEVER, I don't personally think much of the run-up was S&P front-running, why? Because the SP dropped after earnings when they became eligible, and was held down until the split was announced.

Now to historical some facts, September is a busy month for those poor, over-worked SPY guys. Look, multiple announcements spread over several days/weeks, no single consolidated S&P 500 statement.

So no, we can't read anything into this, yes, could very likely come on Tuesday, or Wednesday, Thursday, even after Battery Day, etc.


Sep 26, 2019 - 5:15 PM: Las Vegas Sands Set to Join S&P 500; Nektar Therapeutics to Join S&P MidCap 400; The Pennant Group to Join S&P SmallCap 600

Sep 24, 2019 - 5:15 PM: Pacira BioSciences Set to Join S&P SmallCap 600

Sep 23, 2019 - 5:15 PM: Fresh Del Monte Produce and Jagged Peak Energy Set to Join S&P SmallCap 600

Sep 20, 2019 - 5:15 PM: NVR Set to Join S&P 500; Jefferies Financial Group, II-VI to Join S&P MidCap 400; Callon Petroleum, PriceSmart to Join S&P SmallCap 600

Sep 17, 2019 - 5:15 PM: CDW Set to Join S&P 500

Sep 16, 2019 - 11:30 AM: S&P 500 buybacks decline significantly in Q2 2019; expenditures still remain higher than the pre-2018 levels

Sep 12, 2019 - 5:15 PM: Park Hotels & Resorts Set to Join S&P MidCap 400; Inogen to Join S&P SmallCap 600

Sep 6, 2019 - 5:15 PM: S&P Dow Jones Indices Announces Nine Companies Set to Join S&P MidCap 400; Ten Companies to Join S&P SmallCap 600

Sep 25, 2018 - 5:15 PM: Rollins Set to Join S&P 500; Inogen to Join S&P MidCap 400; Vanda Pharmaceuticals and Garrett Motion to Join S&P SmallCap 600

Sep 13, 2018 - 5:15 PM: Realogy Holdings Set to Join S&P MidCap 400

Sep 11, 2018 - 5:15 PM: WellCare Health Plans Set to Join S&P 500; HealthEquity to Join S&P MidCap 400; Laredo Petroleum to Join S&P SmallCap 600

Sep 10, 2018 - 3:04 PM: Update: Weight Watchers International Set to Join S&P MidCap 400; KLX Energy Services Holdings to Join S&P SmallCap 600

Sep 7, 2018 - 5:15 PM: Weight Watchers International Set to Join S&P MidCap 400; KLX Energy Services Holdings to Join S&P SmallCap 600

Do you know when the rebalance happened on Sept 2019 would be interesting to know how many of those came before/after the rebalance

 

[Joesantelli]

Whadyamean? NASDAQ:TER was up 2.27% After-hrs. Traded nearly $22.3 MILLION DOLLARS!!

GANNA BE NUTZ IN FRANKFURT come Monday (the horor).

/S

The theory of not adding tesla on a Friday before a long weekend doesint make much sense to me. Long weekend or not doesint Germany always open before us? If s&p always makes announcmenets at 5:15 pm after market close how does this give north american funds an advantage ever?

 

[jamaatta]

Anyone else got the feeling that battery day is being over hyped?

It's so typical for us, as a human beings, to concentrate only for, erm, spooing. Including myself. While maybe THE most crucial day for the future of our planet is on this very month...

 

[Tslynk67]

https://twitter.com/garyblack00/status/1302008120642805760?s=21

Read comments, 2 more companies to be added? Merit here?

Indeed, the three companies joining the 500 are all being promoted from the lower-league, it could well be the case that the new-adds will be announced next week.

 

[azaz]

The other incidents last year after the rebalancing were changes made because of mergers and acquisitions, or spinoffs of companies already in the index, so the committee had to make the changes after the rebalance due to the timing of the events. See the excerpts below:

NEW YORK, Sept. 17, 2019 /PRNewswire/ -- CDW Corp. (NASD: CDW) will replace Total System Services Inc. (NYSE: TSS) in the S&P 500 effective prior to the open of trading on Monday, September 23. S&P 500 constituent Global Payments Inc. (NYSE: GPN) is acquiring Total System Services in a transaction expected to be completed after the market close today.


NEW YORK, Sept. 20, 2019 /PRNewswire/ -- S&P Dow Jones Indices will make the following changes to the S&P 500, S&P MidCap 400, and S&P SmallCap 600 effective prior to the open of trading on Thursday, September 26:

• NVR Inc. (NYSE: NVR) will replace Jefferies Financial Group Inc. (NYSE: JEF) in the S&P 500, and Jefferies Financial Group will replace NVR in the S&P MidCap 400. Jefferies Financial Group is spinning off its holdings in Spectrum Brands Holdings Inc. (NYSE: SPB) and post spin-off, Jefferies Financial Group will be more representative of the mid-cap market space. Spectrum Brand Holdings will not be added to the S&P Composite 1500 at this time.

NEW YORK, Sept. 26, 2019 /PRNewswire/ -- S&P Dow Jones Indices will make the following changes to the S&P 500, S&P MidCap 400 and S&P SmallCap 600:

• Las Vegas Sands Corp. (NYSE: LVS) will replace Nektar Therapeutics (NASD: NKTR) in the S&P 500, and Nektar Therapeutics will replace Sotheby's (NYSE: BID) in the S&P MidCap 400 effective prior to the open of trading on Thursday, October 3. BidFair USA LLC is acquiring Sotheby's in a transaction expected to be completed soon pending final conditions. Nektar Therapeutics is ranked near the bottom of the S&P 500 and has a market capitalization more representative of the mid-cap market space.

After these, there weren’t any changes until near the end of November, when there were two more changes in a couple weeks for similar mergers and acquisitions and spinoffs. Aside from quarterly rebalancings and these other events, the only time they made a change in the last year without an event involving a company already in the S&P 500 was adding Dominos Pizza in May 2020 shortly after their Q1 earnings report.

Also for all of the moves they made in the past year, they were moving companies from the S&P 500 to the S&P MidCap 400, so it seems that S&P 400 companies are their preferred choices when it comes to moves. The S&P 400 is supposed to be for companies between $2-$8B market cap, so there’s no way Tesla gets added there first.

Overall, unless there are some mergers and acquisitions in the next few weeks, and the committee decides that is how/when they want to add Tesla in (and add them in at the acquired companies weighting), I think we will be waiting until Q3 earnings call, which hopefully should be enough to convince the committee they should not wait any longer.

Much more informative than Gary Black, thank you.

 

[heltok]

The good: We can get battery day/FSD/Q3 ER before S&P index funds are allowed to buy. Let them pay full price rather than discount prices.
The bad: More S&P drama for the next months
The ugly: The last month we have been a bit too drunk on the S&P500 cool-aid, let’s drink some water, get over the hangover, and go back to waiting for fundamentals to catch up with reality.