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

[zach_]

He also indicated that they aren’t going to let up in keeping rates at an elevated level. Basically they want to get inflation down to 2% (unreasonable IMO) and want unemployment to go up.

Do they have the tools? Yes.
Have they blown up the balance sheet and shown a resolve to extinguish inflation? I think so.

I was hoping 2023 wouldn’t be as bad as 2022, but all indications are the next 6-8 months will be rough.

It's an important point, but do note a few things.

He said they won't let up until it's on a clear trajectory to 2%. Which I know feels like meaningless semantics, but I feel it's a key difference. Additionally the Fed use Core PCE (not CPI) and PCE runs lower, with October core PCE being 5.0 (we get November tomorrow).

Under appreciated is they want "financial conditions" to be tight, to help them with their fight with inflation, and the stock market/rates are a huge part of financial conditions. Basically Powell has to sound super aggressive, because if he leaves the door open for dovish interpretation, the market is going to sniff that out, stonks rally, rates drop and financial conditions ease. I think this is part of why he sounds so unambiguously aggressive.

Lastly, while this is getting into the weeds, they do plan to bring down the balance sheet massively, but there is also a massive amount of $ sitting in Reverse Repo, which if it ever finds it's way out (I suspect it will when things stabilize) that will help offset that shrinking effect. Though it is still an important consideration if you are focused primarily on the macro market.

 

[JRP3]

While I personally have concerns about the course of the fed's action, I struggle to find 2008 to be an appropriate comparison in any way. 2008 was as serious as it was largely because our financial system was on the brink of collapse.

I don't see us anywhere near a 2008 scenario now and frankly I think Elon is suffering from PTSD induced by that earlier struggle.

 

[wipster]

Hey you know that inventory of only 7 cars in the PNW I was talking about earlier?

Ain't there no more... nada, nothing zero. Good on Tesla!

 

[MC3OZ]

He also indicated that they aren’t going to let up in keeping rates at an elevated level. Basically they want to get inflation down to 2% (unreasonable IMO) and want unemployment to go up.

Do they have the tools? Yes.
Have they blown up the balance sheet and shown a resolve to extinguish inflation? I think so.

I was hoping 2023 wouldn’t be as bad as 2022, but all indications are the next 6-8 months will be rough.

The IRA fights against that aim, expanding mining, battery production, EV production etc and creating jobs in those sectors.

One question is the ability to fund the IRA in a recession, without running big deficits.

And recessions are never vote winners, all politicians have an eye on the next election.

The sectors of the economy most likely to contract are those in direct competition with sectors receiving IRA funding, but which themselves do not receive any IRA funding.

The ICE auto industry employs a lot of workers, those jobs have a questionable future at best. A recession will accelerate plant closures. In some ways a recession is the perfect opportunity to shutter an ICE factory and blame the government, an opportunity some managers might take with both hands.

As ICE factories are shuttered fewer ICE cars are made. that accelerates the natural growth of the EV market.

A recession probably makes the IRA more effective, but makes winning the next election very difficult.

 

[capster]

Be interesting to see if triggering the uptick rule today proves to be a tactical blunder for the shorts intent upon running out the clock for 2022.

 

[Ogre]

Listened to the Twitter "Spaces" interview with Elon.

Here is what I got out of it In a nutshell:

1). Short term seems to be very problematic, don't expect Tesla to beat numbers and they might not even make their numbers.

What I got out of this was that production is fine and they may well hit their numbers on volume. The bottom line might slide, but production will continue to grow. That is the single most important metric to Tesla so saying they won't make their numbers is not correct.

Profits will likely not be as good as expected, but the cars will be getting out the door.

If you can hang on ... you will do well ... if you are on the edge with margin, the next few weeks (months) could be really ugly. I didn't personally walk away from this interview feeling particularly good.

I'm not sure what this means for the stock. It sure feels like we are oversold even if there is a downturn.


Of course I didn't expect to be here either.

 

[capster]

This is sounding very bearish .

Not sure to which you’re referencing, though I don’t recall this thread ever being more despondent.

I’m not sure why. If you avoid adding a time constraint, you should do fine, e.g. buy and hold. The company is doing well and all the longs have to do is be patient.

Speaking of time not being your friend, the shorts are the ones in the minefield.

 

[Big Time]

I didn’t see this posted and for those who don’t want to read through the raw numbers and do the calculations, the margin is 60%, according to the Twitter poster JamesCat and confirmed by the author of the tweet that @heltok posted. Wowsers.

@The Accountant this is insanity!

TwitLonger — When you talk too much for Twitter

TwitLonger is the easy way to post more than 140 characters to Twitter

www.twitlonger.com

 

[Sancho]

Elon has a tendency to speak apocalyptically. He's always talking about how Tesla almost went bankrupt, when undoubtedly he could have raised massive amounts of capital at any time. His Mars mission seems to be motivated by avoiding the destruction of the entire human race on earth. And if we do manage to survive on earth, then we will all become enslaved by our AI masters.

So when Elon talks about a 2008-like recession, I chalk that up to Apocalyptic Elon. Maybe a recession is coming that is so deep that it wipes out the profitability of Tesla for a period, but there's little evidence of that now, and Elon talking about it doesn't change my view on the unlikelihood of that happening.

 

[⚡️ELECTROMAN⚡️]

#2 no further stock sales for 18 to 24 months

What time was it when he said that? Was the aftermarket closed at the time?

 

[Opus BC fan]

What time was it when he said that? Was the aftermarket closed at the time?

No. It spiked up. 5:26 ET

 

[capster]

Another trick to succeeding with the buy and hold strategy is to keep your nut small. Though there is a lot of temptation to do otherwise when the stock price is high.

I like to buy somewhat expensive treats while living in a house well within my means. Then if and when we see a dip like this, I can just forego the treats for a bit.

 

[The Accountant]

@The Accountant this is insanity!

TwitLonger — When you talk too much for Twitter

TwitLonger is the easy way to post more than 140 characters to Twitter

www.twitlonger.com

I am not a lawyer but this might be Material Non-Public Information (MNPI). Just because it was there for the public to find does not mean someone should share it on twitter. If someone left a confidential document in a coffee shop and you found it and then published it on Twitter - if not illegal, definitely poor form. Again, maybe nothing wrong with this but if I found this security weakness I would have contacted Tesla and not share it with the world.

Edit: There have been a few people computing Megapack margins of +50% before this information was revealed. This gives us more confidence that the calculations may be reasonable.

 

[Big Time]

Moʍ I’ɯ ɹǝɐllʎ ǝxɔᴉʇǝp ɟoɹ ᄅ0ᄅƐ

 

[Artful Dodger]

Uptick rule triggered but might not matter if you know who is dumping shares

What? Bernie Madoff is selling shares? I thought that (yet his exemption lives on to haunt the living).

Key Points About Regulation SHO | SEC.gov

“Naked” short selling is not necessarily a violation of the federal securities laws or the Commission’s rules. Indeed, in certain circumstances, “naked” short selling contributes to market liquidity. For example, broker-dealers that make a market in a security generally stand ready to buy and sell the security on a regular and continuous basis at a publicly quoted price, even when there are no other buyers or sellers.

TL;dr to continue short selling at a SP below the current market, all shortzes have to do is buy PUTS, then their Options Market Makers reflexively sell shares they may not even have, nor do they check if they have them (which is all legal via the Madoff Exemption, see above). This is called 'delta hedging' but in this case is an abuse of their priviledge access to the market to conduce legalized naked shorting.

This is why the supply of shares never runs out, even long after all the real sellers have sold. The Madoff Exemption allows the creation of these phantom shares (which are never disclosed), thus violating the market law of supply and demand, and letting wealthy short sellers (ie: hedge funds and bill gates) to continue to profit from a market that nolonger represents the underlying equity.

This appears to be profitable enough that the SEC, Congress, and the unwashed all are blind to the existance of this market corruption.

Is this not getting through? I believe I've mentioned it previously.

 

[heltok]

I am not a lawyer but this might be Material Non-Public Information (MNPI). Just because it was there for the public to find does not mean someone should share it on twitter. If someone left a confidential document in a coffee shop and you found it and then published it on Twitter - if not illegal, definitely poor form. Again, maybe nothing wrong with this but if I found this security weakness I would have contacted Tesla and not share it with the world.

Edit: There have been a few people computing Megapack margins of +50% before this information was revealed. This gives us more confidence that the calculations may be reasonable.

Yeah, that's true. But now it's public so let's digest it before Wallstreet does.

Lathrop will make 40GWh/year, they sell at $550/KWh, that's $22B in revenue. At 60% margin that's $13.2B/year in profit. Then scale this to 1TWh/year in 2030, that would be $330B/year. At P/E 20, that would be $6.6T market cap.

EDIT: And this is before IRA.

 

[traxila]

Yeah, that's true. But now it's public so lets digest it before Wallstreet does.

Lathrop will make 40GWh/year, they sell at $550/KWh, that's $22B in revenue. At 60% margin that's $13.2B/year in profit. Then scale this to 1TWh/year in 2030, that would be $330B/year. At P/E 20, that would be $6.6T market cap.

Those margins will be much lower by then. How about a 30%? Then we can settle for three trillion or so just from batteries. Throw in some cars, solar roof, Optimii and maybe even FSD and we might have something going on.

 

[Congo Line]

I didn’t see this posted and for those who don’t want to read through the raw numbers and do the calculations, the margin is 60%, according to the Twitter poster JamesCat and confirmed by the author of the tweet that @heltok posted. Wowsers.

I haven’t seen any information regarding competition for Tesla in the megapack market. There are some other players in this area; is it just that there is so much demand that price competition is not a concern for next couple of years?

 

[Singuy]

Yeah, that's true. But now it's public so let's digest it before Wallstreet does.

Lathrop will make 40GWh/year, they sell at $550/KWh, that's $22B in revenue. At 60% margin that's $13.2B/year in profit. Then scale this to 1TWh/year in 2030, that would be $330B/year. At P/E 20, that would be $6.6T market cap.

EDIT: And this is before IRA.

Isn't that 60% gross margins and not net margins?

 

[Ogre]

I haven’t seen any information regarding competition for Tesla in the megapack market. There are some other players in this area; is it just that there is so much demand that price competition is not a concern for next couple of years?

ROI on these things is so high that demand is through the roof.

Even if the competition was selling it at half the price, the competition can’t make enough of them to keep up with demand. (So people would still buy from Tesla)