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

[mongo]

Um? What? The first column has a "little" issue.

But doesn't what you have there show less tax paid with an earlier execution of the options? Waiting until $4,000 to execute vs. executing now costs him more than twice as much in tax.

Edit: I see you fixed the first column.

Right, he pays more dollars in tax but look at the line above, he nets ~$645k more, meaning he pays a lower percentage in tax.

 

[ZachF]

US is in a severe recession. US consumers continue to spend $500 to $1000 on new iPhones. Something doesnt add up.

Apple’s revenue is only up 2% YoY though, and profit is down 8% YoY… these aren’t growth numbers by any stretch when 9% inflation is factored in.

Honestly the market is overreacting a bit to these mostly lukewarm Apple and Amazon numbers, probably because the market has been overly harsh the last ~6 months.

 

[Singuy]

Arkk keeps swinging and missing. Tdoc was down 17% from earnings yesterday and Roku down 25% today. Should have just stuck with Tesla.

 

[Singuy]

Apple has always been fairly recession proof. People will sacrifice a lot of things, but smartphones have been elevated from "Want" to "Need".

I wouldn't take Apple's results as any sort of metric of the health of the economy.

Well, the speed at which people upgrade will be the barometer for the economy.

 

[Ratanpara]

People are underestimating positive impact of EV credit, it’s is good for EV industry big time, though it hasn’t passed yet but hopeful.

 

[Singuy]

People are underestimating positive impact of EV credit, it’s is good for EV industry big time, though it hasn’t passed yet but hopeful.

We talk about how the credit is good for Tsla, but have anyone did the calculation on the effect of 15% min corporate taxes? Looks like they are expecting to generate 313 billion dollars in revenue, meaning that's 313 billion dollars worth of earnings gone from the entire market.

 

[thx1139]

People are underestimating positive impact of EV credit, it’s is good for EV industry big time, though it hasn’t passed yet but hopeful.

People are to F'ing focused on year or two. The real impact of the credit is longer term as it accelerates the death valley for ICE vehicle sales.

 

[Chunky Jr.]

+10 after hours thanks to Apple et al

 

[StarFoxisDown!]

Apple’s revenue is only up 2% YoY though, and profit is down 8% YoY… these aren’t growth numbers by any stretch when 9% inflation is factored in.

Honestly the market is overreacting a bit to these mostly lukewarm Apple and Amazon numbers, probably because the market has been overly harsh the last ~6 months.

These stock moves on companies that are posting laughable growth compared to Tesla just add to my annoyance

 

[MP3Mike]

Right, he pays more dollars in tax but look at the line above, he nets ~$645k more, meaning he pays a lower percentage in tax.

I don't think so. You can't pay more in tax and be better off if the end value is the same. (i.e 41.5% tax on $4M is worse than 41.5% tax on $430k + 28.3% tax on $3.5M.)

For the $500 option he would owe $990,500 of tax after selling at $4000 for a total tax of $1,168,950. ($430k * 41.5% + $3.5M * 28.3%.) That would make the ending net value $2,761,050. ($4M - $1.16M tax - $70k initial exercise.)

And last time I check $2.76M is greater than $2.29M. ($3,930,000 - 41.5%)

 

[thesmokingman]

These moves on companies that are posting laughable growth compared to Tesla just add to my annoyance

When you're annoyed *sugar* goes up!

 

[EVMeister]

When you're annoyed *sugar* goes up!

Exactly. Keep the rage coming.

 

[2daMoon]

What I think would be groundbreaking and a real show stopper would be to throw a ball at Optimus and have it catch the ball. I'm talking tossed underhand from a person. Showing the adaptation to a real time problem and using sensors to adjust to the environment is a very simple thought but would show a grand ability overall. I doubt this to be possible but you never know.

Frisbee

And it throws it back.

 

[Curt Renz]

It might be interesting to learn Elon's opinion of this new political party.

 

[StarFoxisDown!]

Arkk keeps swinging and missing. Tdoc was down 17% from earnings yesterday and Roku down 25% today. Should have just stuck with Tesla.

Crazy how much money/value ARK has lost at this point with their strategy of selling TSLA shares to buy up shares of these other stocks. We had this discussion a few months ago and said this exact scenario was likely to play out.

 

[elasalle]

Arkk keeps swinging and missing. Tdoc was down 17% from earnings yesterday and Roku down 25% today. Should have just stuck with Tesla.

Good for selling PUTS the next day

 

[The Accountant]

@The Accountant , it pains me, but I have to disagree with you.
It is better for Kimbal to avoid exercising his options for as long as possible if his goal is maximum return.
While it seems counterintuitive, the reality is that one gets a larger net return and higher percentage retention by delaying exercise even though one ultimately pays more dollars in tax.
What it boils down to is that the amount one pays in tax on inital exercise no long gains value nor does the cost basis. Further, the returns from the remaining balance will be taxed again. The result is that there is less to grow and the options end up double taxed which the reset basis doesn't counteract.

Simple example spreadsheet:

options	1000
short term tax	41.50%
long term tax	28.30%
exercise price	$70
final price	$4,000
exercise price	$500	$800	$1,200	$1,600	$2,000	$3,000	$4,000
exercise cost	$70,000	$70,000	$70,000	$70,000	$70,000	$70,000	$70,000
gross value	$500,000	$800,000	$1,200,000	$1,600,000	$2,000,000	$3,000,000	$4,000,000
gain	$430,000	$730,000	$1,130,000	$1,530,000	$1,930,000	$2,930,000	$3,930,000
tax	$178,450	$302,950	$468,950	$634,950	$800,950	$1,215,950	$1,630,950
net value	$251,550	$427,050	$661,050	$895,050	$1,129,050	$1,714,050	$2,299,050
gain	8	5	3.333333333	2.5	2	1.333333333	1
pretax value	$2,012,400	$2,135,250	$2,203,500	$2,237,625	$2,258,100	$2,285,400	$2,299,050
taxable	$1,760,850	$1,708,200	$1,542,450	$1,342,575	$1,129,050	$571,350	$0
tax	$498,321	$483,421	$436,513	$379,949	$319,521	$161,692	$0
net	$1,514,079	$1,651,829	$1,766,987	$1,857,676	$1,938,579	$2,123,708	$2,299,050
total tax	$676,771	$786,371	$905,463	$1,014,899	$1,120,471	$1,377,642	$1,630,950

As to why now, it may be he wanted shares to donate to his Big Green charity.
Edit: fixed first column

I think I understand what you are getting at.
When I compute the 2 scenarios, it is better to exercise now and get capital gains later when you sell.
If Kimbal exercises now and sells the shares later at $3k per share he nets about $49.9m (see first yellow cell below).
If we waits until $3,000 to exercise and sells, then he nets only $42,7m (the 2nd yellow cell).

However, he has an opportunity loss on the 7.8m in taxes he pays now (see orange cell). That money could be earning something.
It is possible he could be forgoing gains on this $7.8m that would exceed the tax benefit of exercising now.

However, I do know of several senior executives who have exercised early to get the long term cap gains on the eventual sale.

 

[Prunesquallor]

Well, the speed at which people upgrade will be the barometer for the economy.

Carriers have essentially established “Phone-as-a-Service” these days. Mine offers zero-interest ~$25/month for 36 months for a new iPhone. Then, rinse and repeat. There's no step-function pain for a new phone, same as s/w upgrades.

 

[thesmokingman]

Oh joy, Pat Gelsinger of Intel is gonna be back on CNBC yet again, to beg ya to stop selling shares lmao.

 

[Maarten]

Green hydrogen won't be cheaper than grey/brown hydrogen for as far as the eye can see (unless fossil fuels are hit with stiff excise taxes).
Battery electric is already cheaper than brown hydrogen.

Hydrogen is an answer looking for a problem. It's dumb.

It is even worse than that.
In Europe fossil fuel companies say that they will use green energy for making hydrogen.
Sounds good? Eh... well, a lot of politicians are parroting this fossil fuel tale.

However, for the coming years there is a shortage of green energy.
So they are taking the green energy away from other other places, where replacement of fossil energy is very, very necessary.
And on top of that they do it in a very inefficient way.
Now tell me: how difficult is it to comprehend that that is stupid? Politicians, lobbyists, ....