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

[Nocturnal]

This sale is totally intentional done this way to be news cycle as long as possible as his critics highlight him as someone who is a freeloader.

I want to believe that Elon isn't that stupid. The critics know that forcing people to sell would be bad for the market, they just don't care.

 

[dl003]

Q4 numbers don't even have to be spectacular. We can safely assume that they'll deliver at least 270k for Q4. That's a 36k improvement over Q3. Given what we know about how much Tesla is increasing earnings for every dollar of revenue growth, that'll still drop the Forward P/E well below 100 if the stock were to stay at 900.

There's really little room here to drop further.

You nailed it with this last sentence. At times I am angry and frustrated, wondering why he's handing hedgies and shorts a life jacket. However, the right thing to do is to focus inward. The market is always irrational and if the stock price goes lower while the fundamentals stay the same, your risk also gets reduced.

That and I believe he has a plan for all of us though sometimes he works in mysterious ways.

I'm slowly realizing why they call us a cult.

 

[Singuy]

I want to believe that Elon isn't that stupid. The critics know that forcing people to sell would be bad for the market, they just don't care.

Sheep followers are very stupid and cannot distinguish the difference between wealth and income to save their lives. So news headline like "Elon sold 2 billion dollars to pay taxes, tanking Tesla shares today" is a good way to educate the dumb.

 

[Nocturnal]

Sheep followers are very stupid and cannot distinguish the difference between wealth and income to save their lives. So news headline like "Elon sold 2 billion dollars to pay taxes, tanking Tesla shares today" is a good way to educate the dumb.

I don't think they care either. "Still not enough" etc. If that was the plan it hasn't worked based on interactions I have on Twitter.

 

[StealthP3D]

Lol you think that's irrational moaning??? Dear lord man.

And no, I'm in LEAPS, not short term gambling. If you think there's some grand plan for taking 30% of the value with a scheduled sell strategy where Elon continually is getting less and less $ wise for his sells, then I'd say that an irrational take.

30% swings are normal for a stock as disruptive and growing as quickly as Tesla and that would be true without Elon's selling. Thinking there would have been no correction at all without the selling is probably not correct either. But people love to attribute all of a move to a single reason. It just shows they don't understand how markets normally work. There is no way we would still be above $1200 given the macro environment, even without a single sale from Elon.

The impact from large sales like Elon's have a diminishing impact as the price is reduced from the initial selling, it's not proportional to the amount of selling or the length of time the sales continue. Most of the impact happens early. That's because demand for a stock is like auto demand, it's elastic, the lower the price, the more demand.

And that is why it's not going to make a big deal either way just how Elon unloads his shares. Elon is a big picture kind of guy, he's not going to fret over whether he got 5% or 10% more or less, he's just going to sell it in a straight-forward manner. It's going to temporarily reduce the price but, as the price is pushed down, demand picks up. The lower the price is pushed, the more shares he can sell without pushing it lower. There is no way to sell that many shares while keeping the share price at an all-time high and any impact to the share price is only of a short-term nature.

Since all your positions have a one-year or longer time horizon, it's unclear why the teeth-gnashing. Because you miss looking at that number on your brokerage statement that is 30% higher? Because you are happier when the number looks plumper? I don't get it.

 

[StealthP3D]

I don't think they care either. "Still not enough" etc. If that was the plan it hasn't worked based on interactions I have on Twitter.

Oh, I see where you went wrong, you're on Twitter! Big mistake!

 

[StarFoxisDown!]

I really don't think Elon likes exponential rises in the stock. He has done a number of things over the years to limit the stock when it is really going. This is just another example. There is a business case for it too as it hurts the financials of the stock which can cause a different type of pop. Elon most certainly could have gone a different route on this, but I don't think he really cares about money. He cares about making points. It is likely misguided on his part that he can control the narrative, but I think that is what he's trying to do.

In the end though, Wall Street wasn't going to consistently value Tesla at 1200 per share on the fundamentals. We've seen consistently that their valuation has been between 110-125 2022 EPS. It was basically pinned in that range from mid-March until mid-Oct. Then we had a gamma squeeze that pushed the stock the limits. Elon saw it and let the air out. Combine that with EPS estimates stalling at ~8.60 and macro scares, and you have what is happening. This is all hindsight, but valuations don't stay low forever if fundamentals don't change (nor do they stay high). At 8.60, we should see the stock in the 940-1075 range. IMO anything under 1050 is clearly being undervalued by Wall Street, but we always see over corrections on volatile stocks.

Now I think most of here can agree that 2022 EPS will be much higher than 8.60 (I'd be very surprised if the first 3Qs weren't over that), but until the market gets there as a whole the fair value right around the 1T market cap... plus or minus a bit. As we move into Feb/March this valuation will change over to 2023 though which are currently around 9-10, but not enough of them are in yet. That will come after Q4 numbers and 2022 guidance.

Well the consensus EPS estimate is the key element here. Even buy side Analysts have been delaying their 2022 EPS revisions for as long as they can even though just taking Q3 earnings and extrapolating out to 2022 gets you pretty much to current EPS estimates. In fact, throughout all of 2021 even after each earnings release, analysts, even buy side would refuse update their 2022 EPS estimates. They only started actually revising them at the beginning of Q4.

Most think the gamma squeeze was the reason for the rise to 1240. While it was definitely a big part of it, I firmly believe it was Wall St finally getting all the shares they wanted and was finally ready to ride the stock higher.

To me at least, 2021 was a crystal clear example of how orchestrated Wall St collectively is. The whole thing is a sham. And when I say sham, I mean Hedge funds, the Big Boy investment banks, the rating agencies, and so on.

If Wall St collectively isn't "positioned" to ride the next big rally, they simply work with their analyst and collude behind the curtains with the many tricks they have. To have TSLA's P/E drop from 1200 to 275 ( after Q3 earnings, before the big breakout) within a single year is beyond anything I've seen in terms of P/E compression for a growth stock that has accelerating growth for that year. Amazon took 4 years for it's P/E to compress........and the thing is it's not like it was hard to see. Tesla's earnings are insanely easy to read and understand and then plug those same margins into higher production levels. Wall St isn't that stupid. They know what they were doing.

 

[Knightshade]

He cares about making points. It is likely misguided on his part that he can control the narrative, but I think that is what he's trying to do.

For expanse fans- Elon often shows a James Holdenesque belief that if you just give everyone the best information, they'll all act smart and rational and do the right thing based on it.

Which is how Elon tries to act on such info, and is a great goal.

But not even remotely how large swathes of the general population actually react to such things.

 

[StarFoxisDown!]

30% swings are normal for a stock as disruptive and growing as quickly as Tesla and that would be true without Elon's selling. Thinking there would have been no correction at all without the selling is probably not correct either. But people love to attribute all of a move to a single reason. It just shows they don't understand how markets normally work. There is no way we would still be above $1200 given the macro environment, even without a single sale from Elon.

The impact from large sales like Elon's have a diminishing impact as the price is reduced from the initial selling, it's not proportional to the amount of selling or the length of time the sales continue. Most of the impact happens early. That's because demand for a stock is like auto demand, it's elastic, the lower the price, the more demand.

And that is why it's not going to make a big deal either way just how Elon unloads his shares. Elon is a big picture kind of guy, he's not going to fret over whether he got 5% or 10% more or less, he's just going to sell it in a straight-forward manner. It's going to temporarily reduce the price but, as the price is pushed down, demand picks up. The lower the price is pushed, the more shares he can sell without pushing it lower. There is no way to sell that many shares while keeping the share price at an all-time high and any impact to the share price is only of a short-term nature.

Since all your positions have a one-year or longer time horizon, it's unclear why the teeth-gnashing. Because you miss looking at that number on your brokerage statement that is 30% higher? Because you are happier when the number looks plumper? I don't get it.

Yeah I'm just going to bow out of this back n forth with you. The fact that you think what I originally posted is "teeth-gnashing" is beyond stupid and I think most here would agree.

 

[Singuy]

I don't think they care either. "Still not enough" etc. If that was the plan it hasn't worked based on interactions I have on Twitter.

His critics have less and less ammo while his fans are getting more to defend him. People call him a tsla stock pumper so he intentional tank stock price by calling it too high. They say he is too wastful as a human being and he sold all his houses and now lives in shack.

So if his selling of his stock didn't tank the share price, critics would say "see you should be selling more as it has no affect on shareholder value". They can say that today and his defenders will cry how him selling just a tiny bit ended up crashing Tesla by 30%. His critics doesn't care but again, makes his followers more sticky.

 

[Artful Dodger]

When Q4 earnings come back and if they support the higher margins, that should be the big bump up.

That would be the 1st time in wot, 5 years, where there wasn't a January/Q1 slump. Wall St. plans on it, sets their calendars by it. Last year, all it took was a little boo/scare tweet from Burry to spook the market.

I don't buy options, I don't use margin, I don't scare easy. I'm in for the duration.

Tesla will be the biggest company in the World by the time Model 2 ramps on 3 continents. Then TE, Robotaxi, AI as a service, Teslabot, others just keep the ball rolling.

My estimates show that I'm ontrack for annual TSLA gains of over a million dollars per year by the time I'm 65.

By HODL'ing.

Cheers!

 

[SOULPEDL]

… At times I am angry and frustrated, wondering why he's handing hedgies and shorts a life jacket.

… That and I believe he has a plan for all of us though sometimes he works in mysterious ways.

This is why I’m confident we are missing key puzzle pieces. 4D, not worried, payoff in the end, patient.

 

[StealthP3D]

One can only hope that Elon learned something from this, and the next time he is planning to exercise shares he re-considers a private share offering through a broker, that is done in a day. The overall impact for him, and for all shareholders, would be far less pronounced.

I wouldn't count out that that's how this selling ends, with a disclosure that a large number were sold all at once to private parties. The way such a private placement of insider's shares could/might happen in this case is:

Elon's rep communicates with billionaires/funds that might want a larger stake
Tells them Elon will be selling X number of shares on the open market between X and Y dates
They have the option to subscribe to between x and y number of shares to be priced at the 20th percentile of all shares sold during those dates on the date Y plus one day. This is a good deal because the selling of all those shares will depress the market price and act as a good discovery for the value of the shares.

At the conclusion of all this selling, the disclosure of the large number of private placement sales will let the market know the selling has been completed and the price will likely rise.

 

[Opus BC fan]

Enough already...

ordered 5 more at 887.xx
(nothing on margin- we will see if it fills)

 

[henchman24]

Well the consensus EPS estimate is the key element here. Even buy side Analysts have been delaying their 2022 EPS revisions for as long as they can even though just taking Q3 earnings and extrapolating out to 2022 gets you pretty much to current EPS estimates. In fact, throughout all of 2021 even after each earnings release, analysts, even buy side would refuse update their 2022 EPS estimates. They only started actually revising them at the beginning of Q4.

Most think the gamma squeeze was the reason for the rise to 1240. While it was definitely a big part of it, I firmly believe it was Wall St finally getting all the shares they wanted and was finally ready to ride the stock higher.

To me at least, 2021 was a crystal clear example of how orchestrated Wall St collectively is. The whole thing is a sham. And when I say sham, I mean Hedge funds, the Big Boy investment banks, the rating agencies, and so on.

If Wall St collectively isn't "positioned" to ride the next big rally, they simply work with their analyst and collude behind the curtains with the many tricks they have. To have TSLA's P/E drop from 1200 to 275 ( after Q3 earnings, before the big breakout) within a single year is beyond anything I've seen in terms of P/E compression for a growth stock that has accelerating growth for that year. Amazon took 4 years for it's P/E to compress........and the thing is it's not like it was hard to see. Tesla's earnings are insanely easy to read and understand and then plug those same margins into higher production levels. Wall St isn't that stupid. They know what they were doing.

The 22 EPS estimates have been pretty consistently updated. Last December they were around 5.50, June 6.50, Sept 7.40, and basically since early Nov 8.60. I wouldn't say they are delaying at all, they are just more conservative in their estimates. Going up ~3 (over 50%) in 12 months is pretty substantial, but I think the group here overwhelmingly think that is still ~50% low and EPS for 23 is likely 60-70% low (so be prepared for the same story next year).

 

[15Peter20]

Enough already...

ordered 5 more at 887.xx
(nothing on margin- we will see if it fills)

Good luck?

 

[3mp_kwh]

Where our heads are in "multiple compression" and "law of big numbers" sets up the buy/sell, in my opinion. As stated, there is now a denominator to multiply...and keep us sober.

Since 2013, I ignored (at peril) the simple buy&hold and worked trading ranges, instead. Today, with the added technical of ~1mn ~daily EM selling and the P/E compression looking quite rapid, it looks like a buy to me. Yes, P/E is still triple digits atop a ~$bn figure, but the growth, or P/E/..G, helps correct that.

Anyway, I don't post much but have been and will continue going overweight/leverage beneath $1k. I've now had 9 trades in the new ~893-1179 range, from unweight, to portfolio weight, and now overweight. TSLA has been a whipsaw, frequently finishing quarters stronger than intra-quarter troughs. I never graphed it, but would wager mid-quarter to end-quarter prices form anomalous upside, beyond the current technicals and P/E compression.

 

[redan]

Adam Jonas/Morgan Stanley responsible for our bump (paywalled)?

Top auto analyst Adam Jonas shares his 2022 surprises, plus a prediction for a big move by Tesla​

Top auto analyst Adam Jonas shares his 2022 surprises, plus a prediction for a big move by Tesla

Overall, the auto analyst believes the sector is facing a bumpy road in 2022.

www.cnbc.com

 

[Sofie]

I wouldn't count out that that's how this selling ends, with a disclosure that a large number were sold all at once to private parties. The way such a private placement of insider's shares could/might happen in this case is:

Elon's rep communicates with billionaires/funds that might want a larger stake
Tells them Elon will be selling X number of shares on the open market between X and Y dates
They have the option to subscribe to between x and y number of shares to be priced at the 20th percentile of all shares sold during those dates on the date Y plus one day. This is a good deal because the selling of all those shares will depress the market price and act as a good discovery for the value of the shares.

At the conclusion of all this selling, the disclosure of the large number of private placement sales will let the market know the selling has been completed and the price will likely rise.

Hmmm that’s what I was thinking, that maybe in the end, he would just sell these shares to other brokers, resulting in a very rapid increase in the price.

 

[Zero CO2]

It would be foolish and pointless to remove their highest conviction holding. The idea of a fund comprised of a basket of stocks is that your returns match the weighted average return of all the holdings. And ARK is not naive because they don't believe what you attribute to them, namely that "all disruptions will play out like Tesla" (whatever that means). This is why they have so many companies in each sector.

It appears there are a lot of people that still don't understand what ARK is about. They are making broad based bets that certain sectors will out-perform the market over time. People are free to disagree with their premise, but I really don't like to see their position misrepresented. ARK admits freely they will have many losers in each portfolio.

C'mon people, this is not difficult to understand. Let's keep it accurate.

not sure why you think i am misrepresenting ARK you are reading things into my post that are not stated... my point was to remove TSLA as a thought exercise and and look at their performance... minus TSLA ... i am not going to do the work ... because i have made up my mind ...but my guess is w/o TSLA they are just above average returns ..... nothing wrong with ARK strategy in general ... just does not match my investing philosophy pick a few names and understand them deeply... ARK has way too many companies in their funds to follow in enough depth... and it seems to me they trade in out out of names way too much ... we shall see how this plays out for ARKx in the long run .. i think Cathy is a great macro-economist and has done a great job at identifying the key macro trends for innovation and disruption for the next 5-10 years ....