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

[sonofjorel]

I was in the middle of my slumber when it dawned on me. The S&P committee are clearly $TSLA bulls and investors. It’s the only explanation why Tesla wasn’t added sooner when the market cap wasn’t as high. So why not add it now? Too many upcoming catalysts that will lessen the impact of inclusion. Battery day, production and deliveries, Q3 earnings. After that it will depend on the election and how the market reacts. If the market reacts negatively then announce inclusion and show $TSLA as the lone green shining star amongst a sea of red. If the market reacts positively then inclusion will be delayed until shortly after the Q4 earnings call when Tesla has blown everyone away with their revenue, profit, and 2021 guidance. The stock will be at an all time high and will join the S&P as the fifth largest behind Apple, Amazon, Microsoft, and Alphabet with a 3.5% index weight.

/s

 

[Mike Ambler]

I'd write them about 80 points above the current price, going for profit from the price rise rather than premium

Bet, student question... you'd write them in the money (if so why), or am I reading this wrong? Thanks!

 

[CorneliusXX]

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

While Tesla is growing more valuable every day, it's underlying business has not grown 10x in value in the past 12 months. The stock price increase is a combination of many market and behavioural factors in addition to underlying company execution. I think it would be difficult to argue that, on a purely business execution basis Tesla has increased in value by more than 3x-4x in the past 12 months.

That means the remaining 6x-7x growth is due to the market and behavioural factors. If the market sees real panic Tesla could easily see its market cap drop to $200bn for a short while. If the effects of options trading from big names like Softbank, along with the dramatic increase in retail options trading suddenly reverses we could also see large stock price moves in either direction. These are just two scenarios out of many that could move the stock price to anywhere between $200 and $600+ irrespective of the brilliant execution of Tesla. It also doesn't mean that the price has to drop by anywhere near that much either if markets remain buoyant and the positive outlook for Tesla remains.

Nearly all large fast growing companies have had dramatic drops in price on their way to the top. As an example - Amazon dropped by nearly 2/3 in the GFC.

 

[avoigt]

I believe we should have patience and wait for what happens next week.

It's hard to imagine why they did the $5bn capital raise if there is no need to. That does not make any sense to me although they did it in the past a similar good opportunity but it was of good use at that time. There will be plenty of cash on hand in Q3 and Q4. That $5bn raise almost points to a deal with the commission.

Elon is astounding silent about all the S&P discussion as if he can't talk. If there would be no inclusion we would likely hear from him about it even if its a cryptic meme but he is dead silent. The only reason to be silent is that they have a deal.

What holds him back to make a good joke about the S&P commission in the case Tesla would not be included but considered next quarter? A negative decision is an invitation for an S&P joke but we didn't see one yet.

Sometimes it's more telling what someone does not say versus what he does.

I have no answer for his silence, therefore, my speculation is that this is not over for Q3.

 

[Artful Dodger]

While Tesla is growing more valuable every day, it's underlying business has not grown 10x in value in the past 12 months. The stock price increase is a combination of many market and behavioural factors in addition to underlying company execution. I think it would be difficult to argue that, on a purely business execution basis Tesla has increased in value by more than 3x-4x in the past 12 months.

Your baseline of 12 months is completely arbitrary, and assumes TSLA was properly valued in September 2019. It was not.

TSLA was range-bound for over 5 years before this breakout started in Oct 2019:

Tesla's business has easily grown 10x in that time: 1.5^6 = 11.4

A SP over $500 is justified currently by Tesla's long-term growth, and the likelihood of even higher accelerated growth over the next 24-36 mths (Shanghai, Berlin, Austin).

In spite of the fact that certain fossil fools would try to kill Tesla even now, if they could.

Cheers!

 

[Favguy]

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

If you really do believe that will happen, how much of your holdings will you be selling to buy in lower later?

 

[Favguy]

Stuff like “pigs get slaughtered” coming from him is meaningless. Nobody knows what the peak is. Outside of this message board, 90% of people sell after 400% gains. Most people sell out of stocks like TSLA or AMZN during their rise , missing out on most on the gains Most people following Kramers advice miss out.

If I'd taken that idiots advice, I'd have missed out on almost all the exponential growth I've seen since investing back in early 2012. He's only been cheer leading for TSLA for a year or so, before that he hated it. I almost wish he still did. By this nonsense, I must have been a pig for years now! I really don't like having carnival barkers for the retail masses that sound like they should be muppet show characters on our side!

 

[CorneliusXX]

0.5% is an extraordinarliy low fee for the Croupier's fee. I'd look again at the list of culprits making those sales. Something tells me those shares were all purchased for internal (book-keeping) use.

Guess we'll know more when the 10Q comes out in late Oct. Unless there is an actual S&P announcement before the end of Q3 (confounding variable).

Cheers!

True, but I don't think the number of banks is the driver for the low fee. The low fee is more likely driven by the size of the offering and the method of distribution. Investment banks don't need to do much more work to issue $5bn than they do for $100m - so a lower % on a larger balance still earns great fees for the bankers time.

Additionally, they don't need to go out and book build $5bn of orders - they can just add them to their internal trading desks as part of normal operations (or internal book keeping ) - this greatly reduces the execution and reputation risks of the deal for the banks, leading to reduced remuneration requirements.

As a final comment, the selection of banks to distribute the shares is solely Tesla's decision and no bank would turn down the opportunity to be a part of such a large issuance. I've been involved in negotiating engagement letters with many of these banks for securitisation bond issuances (so not exactly the same as a secondary share offering, but many of the dynamics are the same). As you would expect, they all talk themselves up as being more capable then the next desk down the road to try and argue for as few banks on the deal as possible to collect more of the pot of fees. Tesla have likely annoyed their traditional bankers (MS & GS) somewhat by bringing so many more banks to the deal - but at this point Tesla wouldn't give a firetruck, they are throwing off cash and can self fund tremendous growth. They are not beholden to any capital markets squeeze anymore.

 

[CorneliusXX]

Your baseline of 12 months is completely arbitrary, and assumes TSLA was properly valued in September 2019. It was not.

TSLA was range-bound for over 5 years before this breakout started in Oct 2019. It's business has easily grown 10x in that time: 1.5^6 = 11.6

View attachment 584698

A SP over $500 is justified currently by Tesla's long-term growth, and the likelihood of even higher accelerated growth over the next 24-36 mths (Shanghai, Berlin, Austin).

In spite of the fact that certain fossil fools would try to kill Tesla even now, if they could.

Cheers!

Any point in time reference is arbitrary, but that's the point I was trying to make. There can be huge swings in market cap regardless of company performance due to a myriad of factors outside their control. The market price doubling or halving because of these factors due to sentiment is not unreasonable in the short term.

Perhaps it's just my interpretation of all the disagrees received by any comment that mentions stock prices can drop within a reasonable range of volatility that I find worrisome. It can build up false expectations of certainty around stock price movements in the short term.

Don't get me wrong, I've got a wildly irresponsible percentage of my net worth in Tesla and use some leverage to increase my returns because I've got high conviction that Tesla will still be worth many multiples of its current market cap in 5-10 years. But there are clearly scenarios where the stock price could halve before going on to greater heights and we as investors need to be positioned to handle that.

 

[CorneliusXX]

Karen noted an interesting point on Phase 2 of GigaShanghai. I wonder if we'll see MY production starting this year.
https://twitter.com/enn_nafnlaus/status/1302158871482507265?s=20

 

[tinyrodent]

 

[Amon]

Dear fellow investors,

could it be that S&P didn't include Tesla, because of the quite newly gained insane PE ratio of over 1000?

I myself am invested since the old days and I myself valued this last month's as a non sustainable growth story in regards to the stock price. I still remember the dot.com era where Amazon was also skyrocketing detached their business up to 100 dollars around the millenium with a sharp drop to 2 dollars 2 years later. it took a decade to reach a sustainable 100 dollars valuation again.

I myself expected these 450 billion valuation of Tesla in 4-5 years from now on and not within a couple of months.

So in summary I can understand that the S&P doesn't want to include Tesla to protect the institutional funds, which may get in clash with their customers. I can imagine that a 100+ million dollar rich person does only want to preserve their wealth and wants to have stable companies in regards to their valuation, which don't tenfold within a year.

On the other hand Etsy is a speculative investment too, but at least it's small and doesn't effect the overall portfolio based on the S&P 500 of these institutional funds.

So I think too that this non inclusion is not fair, but I can reproduce the think process of the S&P 500 responsibles too.

I'm not interested in retirement and have a very good paid job, I would work even if I would life in 1980 UDSSR and not getting much money beside some communist pocket money. So I don't care about the Tesla stock price. I know that Tesla will be huge in 20 years like Amazon is today. I hope no one has looses or is forced to sell from a hogh entry point at these high valuations in the past weeks.

I'm a quite reader and I will read from time to time what you have to say.

Peace be uppon the benevolent among you.

 

[MartinAustin]

The S&P folks are making a mockery of their index. "Top 500 companies, apart from Tesla, which is the 7th biggest company but we don't have them in our index."

3 months from now we will have seen Battery Day, Q3 ER and plenty of product updates.

I think Tesla will be newsworthy again, but only because TSLA will be even higher and S&P are making a big mistake.

 

[dw4ngg]

Why is everyone acting like non inclusion come 9/21 is set in stone? There’s a whole other week thru 9/11 for the announcement. All they announced yday were the companies being added into the 500 that were deleted from the 400.

 

[mongo]

Karen noted an interesting point on Phase 2 of GigaShanghai. I wonder if we'll see MY production starting this year.
https://twitter.com/enn_nafnlaus/status/1302158871482507265?s=20
View attachment 584704

Well.. yeah. This is known.
Post from Monday:

Shanghai Model Y Production Has Begun!

View attachment 583045

Tesla Model Y spotted on China highway confirmed as "Made in China"

Industry watchers have confirmed that photos of a Model Y atop a flatbed truck on a highway in China was made at Tesla’s Gigafactory 3 in Shanghai.

 

[MartinAustin]

Why is everyone acting like non inclusion come 9/21 is set in stone? There’s a whole other week thru 9/11 for the announcement. All they announced yday were the companies being added into the 500 that were deleted from the 400.

True. And... S&P can break their own rules any time they want

 

[Drax7]

Bill Gates is not a battery expert - he's got the investment capital. along with VW and others.

I almost sold near the close today for over $6,000 profit. Then I said "naw, let it ride and see what happens!"

JB Straubel probably knows a thing or two about batteries by now, LOL! Still, it's a highly speculative bet. But I don't make bets on whether I like the sound of the company name or not! Especially when they will not be branding consumer items with their name - they will be wholesaling batteries to automakers if their products test out successfully. Imagine this conversation in 2025:

VW CEO: I like your proposed battery solution but I can't put a battery in a VW that has such a silly sounding name.
VW Engineer: But Quantumscape batteries have 20% more energy density, cost 10% less and charge 100% faster!
VW CEO: I know all that but seriously, 'Quantumscape'? We have standards around here.
VW Engineer: But we own 10% of the company!
VW CEO: I know but I can't help it, I just don't like the name...

Good going and smart trade, though over the years I’ve chased too many stories that
Never panned out, and I’ve become cynical . Moreover b to b type businesses
Are so much harder to evaluate.

Keeping an opened mind is imperative for success.
Gotta work on that.
Missed lululemon 2 years at $50 for similar reasons.

 

[Artful Dodger]

Weekend Off-topic:

Spoiler: RIP Uncle Jack

You will be missed.

"The Passing of Jack Rickard, Funeral Service." (1 hour 15 min)

 

[vikings123]

Interesting. I can see a lot of unhappy people on Tuesday who did not close the call today and could get their shares stolen if S&P announcement happens tonight. For eg: If someone sold a 420 call option or 430 call option and did not BTC. The converse might be true for sold puts that did not BTC.

Maybe that explains why these options were still pretty expensive going into the close.

So IBKR assigned me shares for the 410 put I left open going into the close. I guess these are the kind of shenanigans a major announcement about TSLA can bring out.

I put in a limit order of 5C for BTC but it never closed but like I said previously they were going for 3$ a pop at 3:59 EST. So some big fish likely bought a lot of these and exercised them after the close. Nice hedging!

 

[SarahsDad]

These videos never get old.

Notice the demeanor of the BMW and Mercedes drivers in the video. They seem just plain depressed. We must be moving down this scale:

Kinda like this: