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

[ZsoZso]

I have been a simple buy & hold type of investor for a good 8 years from 2014 'till last week (except for a small portion of my portfolio to have some fun swing-trading).
Now, I went a bit crazy and sold off half my shares and bought 2023 calls with $400 strike price instead -- the contracts representing double the number of shares sold. If TSLA keeps going lower and does not recover by the end of the year, I may lose $millions, but at this point I do not care. Lost my patience with the market's stupidity and doubling down (without any extra cash I could throw at it).

Go ahead and throw rocks at me for not being a well behaved HODLer...

 

[Cherry Wine]

I get all that and I went through the dot.com bust and the 2008 financial crisis myself (though I had little to invest back in dot.com burst)

But neither of those events are even remotely close to the same things.

Dot.com bubble - astronomical tech valuations on hundreds of companies with no earnings at all. The S&P P/E back in that time was nearly 1.5X higher than the high point the S&P P/E got in early 2021 and we're already down to the bottom that the P/E got to for the S&P after the dot.com bust.

Financial crisis - The lowest the S&P P/E got was 14.87 and that was from the worst financial crisis in decades and I'm sorry, but the dynamics today are not anywhere close to the financial crisis. We're talking not even in the same city, much less the same neighborhood in terms of dynamics across the economy. And yet, the LOW for the P/E during that crisis was 14.87. The rest of the years, including during the panic of 2008/2009, the P/E for the S&P was 20.

Playing devil's advocate again - the Fed was adding liquidity to backstop the market during the two crises you mention, but is actively looking to remove it here. Couldn't this contribute to us seeing lower P/E ratios than one might otherwise expect?

 

[TheTalkingMule]

Just keep in mind in a recession WS and the MM will not be able (or refuse) to grasp that Tesla is being driven by a secular trend. They will treat TSLA like a cyclical and simply assume that their earnings and sales will be crushed along with the rest of the

Once PE gets pushed to this level, it becomes very easy to sell weekly spreads that are then very very unlikely to be executed. Going down 22% from 1100 in a week is one thing, taking SP down 22% from a 98 PE within a week would need something more toward Putin dropping a nuke.

 

[wws]

How on god’s green creation is Wal Mart only down 1% with a PE over 30 and 0 growth?

For one thing, they pay a dividend.

 

[Ogre]

You would think Tesla's PE ratio would be less affected by this craziness, primarily because:

1. Tesla has almost no company debt, so rising interest rates don't materially increase their cost of doing business.

2. Tesla is flush with cash, so no need to go to the market to get loans that would be affected by interest rates.

3. Tesla has high margins, helping pad their cash reserves and giving them a buffer to decrease prices on their products if need be while still bringing in a healthy profit.

4. Tesla has a long order book, so an economic downturn would have limited to no negative effects on their effective (realistically buildable) demand.

5. Tesla is early in a huge growth cycle.

6. Tesla's main product in general (EVs) are in high demand (whether Teslas or not), and they are not something that you can easily flip a switch on and double or triple output.

7. We are in the middle of a "petroleum crisis", with high oil costs, and Tesla's products break customers free from that--increasing demand.

8. Tesla's products are generally aimed at higher earners, who tend to be less affected by economic downturns.

9. The world is looking for alternatives to Russian oil, where Tesla can play a massive part.

Looking at all of this, you'd think Tesla would be a massive safe-haven for a lot of investors. It seems so obvious that Tesla won't be affected by a lot of what's going on compared to other companies. Yet TSLA is sold more quickly than other stuff.

I've said it before, and I'll say it again. The market is full of morons, and they continue to do moronic things.

If people get too freaked out about the economy and start worrying about their jobs, they stop buying big ticket items. Some of this can be self-fulfilling too. When your investments crash, you get more conservative.

Tesla's order backlog can evaporate.

I'm not suggesting this is likely, I'm holding and expect a turn soon. But the market prices in its worst fears.

 

[brantse]

I just sold the couch cushions to buy more.

 

[StarFoxisDown!]

Just keep in mind in a recession WS and the MM will not be able (or refuse) to grasp that Tesla is being driven by a secular trend. They will treat TSLA like a cyclical and simply assume that their earnings and sales will be crushed along with the rest of the economay and car sector.

There's a fundamental difference in how long Wall St can be ignorant in grasping it or refusing to acknowledge TSLA's value/fundamentals based the scale of a company's earnings, how soon the growth is expected for those earnings.

The scale of Tesla's earnings (large), the stage of the growth they're in (as in now, not 5 years from now), and TSLA trading at a P/E that's under 100, under 50 for 2023 based on Wall St's own expectations = continued market cap increase in the stock.

I would compare it similar to Apple back in the financial crisis where it's valuation was cut in half while P/E compression started in 2009 and lasted all the way through 2012 for the market as whole. Yet Apple was back to it's highs not even a year after it dropped 50%.

He could probably pay the fine, re submit a bid a $35/share or less and put a chunk back into TSLA if he wanted to.

At this point, I would be extremely annoyed if he didn't do that. He's grossly overpaying for Twitter now.

 

[Sofie]

I see the market potentially going down another 5% or so, but today actually really feels like capitulation. Apple finally selling off.

The thing that really sucks about this situation when timing this (and using margin) is that you just know there's going to be massive FUD about Q2's number right up until the P/D numbers come out and then earnings.

On the flip side, the market is so oversold and TSLA's P/E is so low I can't help but think the bottom is in.

I hope so. Hard to see us at 1700-1900$ by years end, from where we stand today.

 

[StarFoxisDown!]

If people get too freaked out about the economy and start worrying about their jobs, they stop buying big ticket items. Some of this can be self-fulfilling too. When your investments crash, you get more conservative.

Tesla's order backlog can evaporate.

I'm not suggesting this is likely, I'm holding and expect a turn soon. But the market prices in its worst fears.

A) Cars are a fundamental necessity. They get bought up even during recessions

B) Main cause of inflation is high gas prices....EV's counter this

C) anyone that has held a reservation for the past year would be giving up their lower price when they ordered if they cancelled and then re-ordered in a year. They would effectively pay over 20% more for the same car

 

[henchman24]

I'd say right now, we are likely the Nasdaq is likely to close below 11300 this week (probably closer to 11200) to eclipse the 200 week EMA. I'd say it is unlikely we have two weeks under that number in a row. If we do, it would be a bad sign.

 

[StarFoxisDown!]

I hope so. Hard to see us at 1700-1900$ by years end, from where we stand today.

Well I think anything above 1250 is off the table for this year, for sure. If the market in general stays at these lows or goes lower by the end of the year, best you can hope for is a return to ATH by the end of the year.........and that would require Tesla blowing out earnings every quarter like they did in Q1

 

[Kenypowa]

There's a fundamental difference in how long Wall St can be ignorant in grasping it or refusing to acknowledge TSLA's value/fundamentals based the scale of a company's earnings, how soon the growth is expected for those earnings.

The scale of Tesla's earnings (large), the stage of the growth they're in (as in now, not 5 years from now), and TSLA trading at a P/E that's under 100, under 50 for 2023 based on Wall St's own expectations = continued market cap increase in the stock.

I would compare it similar to Apple back in the financial crisis where it's valuation was cut in half while P/E compression started in 2009 and lasted all the way through 2012 for the market as whole. Yet Apple was back to it's highs not even a year after it dropped 50%.



At this point, I would be extremely annoyed if he didn't do that. He's grossly overpaying for Twitter now.

I was a student then and was too poor to buy AAPL. I remembered this particular stretch vividly and was shocked and confused how did this stock got hammered so much when Apple just released this amazing device (iPhone) that clearly will change the world.

Now this feels exactly like 2008 AAPL.

 

[traxila]

At this point, I would be extremely annoyed if he didn't do that. He's grossly overpaying for Twitter now.

He can't just walk away. He needs a reason. Like the financing fell through, for example. Although I guess given the climate right now he could credibly claim that. Maybe...

 

[TespaceX]

View attachment 802344

Interesting moves by ARK...

Good for Cathie.
Would be in a worse position like me had she just stayed put this past week.

 

[StarFoxisDown!]

He can't just walk away. He needs a reason. Like the financing fell through, for example. Although I guess given the climate right now he could credibly claim that. Maybe...

As was mentioned, he absolutely can just walk away. It would cost him a billion.

He also can absolutely go to the board and say I'm walking unless we renegotiate the buyout price

 

[henchman24]

I hope so. Hard to see us at 1700-1900$ by years end, from where we stand today.

I can see the lower end of that still, but I don't think 1900 was really in the cards to begin with. Prior to the risk tolerance being killed, I'd say 1600 was the more realistic idea. I'd say that is still very much in play. We got into the 500s last May and peaked in November at 1241. A 7-800 point move is possible here. Especially when we were 950 this time last week.

 

[BrownOuttaSpec]

Yes, their (RIVN) earnings are tonight with a estimated EPS of -1.44 and currently down 13.5% for the day. I hope that is being factored in and is dragging TSLA down today

Looks like someone knows something about RIVN earnings... interesting end of the day right before earnings being released. Hopefully it pulls us up too:

 

[TheTalkingMule]

The thing that really sucks about this situation when timing this (and using margin) is that you just know there's going to be massive FUD about Q2's number right up until the P/D numbers come out and then earnings.

My newest theory is that's precisely when they'll let it rip to do the most damage. Last spring they nailed everyone to the put side. How exactly does that happen this summer? Keeping in mind "they" do not care if TSLA goes up or down.

I think they're gonna smoke the cc writers this summer.

They just want 2 things, your shares cheap and a massive chunk of options market premiums.

 

[SOULPEDL]

Hypothetical... if everyone's options were to close in the green, would the banks be able to payout? (Or is it a payout from the Shorts? Which is the banks?)
Obviously I don't understand all this, but what if there was high risk in Banks doing another collapse and the most immediate way to circumvent was to drop the market and cool it off.

I still have a couple of leaps that I think will be fine, but my June call is nose diving fast. Sounds counterintuitive, but I'm doing nothing at this point. Let the Factories do their thing, get a reasonable Q2, and reiterate 50% growth. Hang in there y'all, we're riding out the storm, can't have them.

 

[Nocturnal]

I don't recall it ever being so bearish around here, at least in my time. Early 2019 wasn't far off but that had a hopeful vibe. I guess it hurts more when it's just the market doing the pushing down.