TSLA Market Action: 2018 Investor Roundtable

[Dwdnjck]

Every time I try to do a short term trade, it winds up becoming a long term purchase.

 

[Chickenlittle]

I only have this to say to Elon:

You better make it up to those of us who believed in what you said by making TSLA a 700 billion dollar company.

Or you will sue him? Are you any better than shorts?

 

[Chickenlittle]

So I lost about 30% of my life's savings because my J20 400 LEAPs went off a cliff in the span of 5 minutes, had to sell and buy DITM leap, all that for nothing? I'm a tad annoyed. Now those J20 400 LEAPs are going to skyrocket and if I want to get back into them, it's a day's wait.

I'm pretty ok with losing money because the stock price goes down, because at least it's anchored to the stock price. But losing money for reasons other than the SP does annoy me, a lot.

Glad I held onto 470 options for Jan value will return. Should have added more

 

[neroden]

This is probably not market related. Didn’t really know where to share. Its basically this twitter guy posting screenshots of an old employee that helped developed the infotainment system breaking his nda because he says it’s Expired. But definitely talking bad about the code.
ato̧̕m̀͡i̴̷̛c̨͝t͝҉͡h̷҉u̵̶m͜͞b͏͝s̀́ on Twitter

This belongs in General Discussion, probably. Moving the followup ---> General Discussion: 2018 Investor Roundtable

 

[Cosmacelf]

So I lost about 30% of my life's savings because my J20 400 LEAPs went off a cliff in the span of 5 minutes, had to sell and buy DITM leap, all that for nothing? I'm a tad annoyed. Now those J20 400 LEAPs are going to skyrocket and if I want to get back into them, it's a day's wait.

I'm pretty ok with losing money because the stock price goes down, because at least it's anchored to the stock price. But losing money for reasons other than the SP does annoy me, a lot.

That’s why I don’t buy options. Too many weird situations can occur that wipe out positions.

 

[schonelucht]

So, I was previously working in M&A and I have quickly set up a simple and basic model for a possible Q3 P&L for TESLA and let's see where we land: 0 net income. (without considering allowances for these tweets)

We can certainly use fresh eyes and modelers. You may want to take a look at this thread : q2-q4 2018 financial projections where a few of us already posted some models for the upcoming quarters.

 

[neroden]

CFIUS is still a thing.

I don't think the Saudis are going to try and buy a stake they could be forced to divest by the US Government.

Tencent also had their stake revealed but they didn't keep adding after the reveal for probably the same reason.

In general, they can go to just under 10% of the stock without worrying about CFIUS.

 

[Fact Checking]

Excellent post, a small correction:

Production rates are going to be threefold what they were in Q2.

So they made 28k M3's in Q2, which is a rate of 2.1k/week - in Q3 they are guiding for 50k-55k M3's, which is 3.8k-4.2k/week, i.e. not three times but about twice the (sustained) rate.

(Fully agreed with all your other observations, spot on.)

 

[neroden]

I agree. Tesla needs more cash to do everything they have on their plate from now thru 2019. Profits from Q3 and maybe Q4 will not be enough to cover all the bases and trim debt too. I do not understand why Musk is so opposed to raising more cash from equity. No one seems opposed to doing it so why not take advantage of it?

Seven letters:
C-O-N-T-R-O-L

I would expect any further equity issuances to be like Google Class C stock

 

[Johan]

Musk have extremely flexible and loyal followers, that is for sure!

Whaddayougonnado? There's this traditional proverb that comes to mind: When Elon gives you lemons you squeeze them in to lemonade Kool-aid.

 

[neroden]

Types of Market Manipulation
Market manipulation comes in many shapes and sizes. The following are a few examples of different types of market manipulation.

• Churning - An attempt by a stock broker to increase activity in a client's account to boost commissions by buying and selling orders at the same price. This activity is intended to drive up the price and attract other investors.
• Ramping - Creating activity or rumors intended to raise the price of a stock.
• Wash trading - Generating activity to push up the stock price by selling and re-purchasing the same security.
• Bear raiding - An attempt by a broker to short sell a security and drive the price down, allowing it to be bought back at a lower price and thus make a profit on the difference.
• Cornering - When enough of a certain stock, commodity, or other asset is purchased in order gain control and establish the price for it.

Cornering's legal, if it's done for the purposes of gaining control (not merely to establish a price). Have to file with the SEC, but it's legal.

There have been several documented bear raids on TSLA stock, particularly over July 4 weekends; the SEC has been AWOL.

Note that to prove a ramping case you'd have to prove intent to raise the stock price, and I think it's pretty clear Musk's intent was to get the hell off the public markets. The fact that it didn't raise the stock price makes it even harder to make the case.

 

[Thumper]

Really hates touch screens In cars. What an axe that he has to grind.

Asking those of you with better programing/system chops, do this guys criticisms seem to have merit? Also, do we have insight into the general level of satisfaction of current IT team?

 

[Fact Checking]

In general, they can go to just under 10% of the stock without worrying about CFIUS.

Are there any hard limits in the CFIUS regulations, or is it completely discretionary? I found this:

Cooley

For example, the types of "transactions" that may fall within CFIUS' scope of review can include not only traditional mergers and acquisitions, but also investments in which a foreign person acquires a small minority investment in a target – in some cases as little as 10 percent or less of the outstanding voting stock in a US company. Covered transactions also can include the formation of a joint venture or even certain long-term leases.
​

I don't like the "or less" language.

But yeah, I'd argue that the Public Investment Fund of Saudi Arabia has such good connections to the White House and Republicans in particular that it seems unlikely to make that they'd be facing too many CFIUS problems. Saudi Arabia has been sold high-tech U.S. weapons after all.

 

[Words of HABIT]

My favorite part of Tesla the IR letter:

We’ve shown that we can make great sustainable energy products, and we now need to show that we can be sustainably profitable. With all the progress we’ve made on Model 3, we’re positioned to do this, and that’s what the team and I are going to be putting all of our efforts toward.

Please provide link to the above captioned quote.

 

[neroden]

My M3 is at the service center for a minor fix, but the part got delayed. The service folks gave me a brand new Mercedes GLC 300 loaner. It's been a day and I already miss my M3. The acceleration, control, response, smooth ride, and tech is just so far ahead of the other manufacturers. Once people drive a Tesla, there is no going back....not until the other guys catch up. This little experience just reinforced my long-term view of Tesla. There is no competition right now.

This is basically my investment thesis on Tesla.

Let's face it: the company's a mess. Internal communications are completely borked; the left hand never knows what the right hand is doing. Their IT department is extremely disorganized to the point where it's seriously damaging software quality. Most of the software on the car is pirated because they never bothered to check the terms of the open-source licenses. Their legal department is beyond terrible, managing to lose a libel case in "libel paradise" England. They aren't even able to keep track of motor vehicle registration rules in all 50 states. HR has been so badly mismanaged that bad actors are placing themselves into management and firing the decent people (yes, I think we now have enough documentation to be sure that this is happening in some departments) -- while this is pretty normal for any large corporation, it's still bad. Management seems to be so disorganized that they can't figure out where they need service centers (despite people yelling at them about it for five years). Delivery logistics seems to be quite beyond them, and customers have even been given cars of the wrong color.

But where's the competition? There isn't any. I follow all of it closely, and everyone else is making *bigger* mistakes.

 

[KarenRei]

Excellent post, a small correction:



So they made 28k M3's in Q2, which is a rate of 2.1k/week - in Q3 they are guiding for 50k-55k M3's, which is 3.8k-4.2k/week, i.e. not three times but about twice the (sustained) rate.

(Fully agreed with all your other observations, spot on.)

Sorry - M3 deliveries in Q2 were 18,449, not production.

 

[neroden]

Are there any hard limits in the CFIUS regulations, or is it completely discretionary? I found this:

CFIUS can, of its own volition, review essentially anything where a foreigner buys any stock in anything in the US. But it doesn't, and it never has. There's a list of transactions for which you're strongly encouraged to *ask* CFIUS, and the threshold for that was set at 10% of stock. For smaller stuff, you don't have to talk to them, and they almost certainly won't call you.

Cooley

For example, the types of "transactions" that may fall within CFIUS' scope of review can include not only traditional mergers and acquisitions, but also investments in which a foreign person acquires a small minority investment in a target – in some cases as little as 10 percent or less of the outstanding voting stock in a US company. Covered transactions also can include the formation of a joint venture or even certain long-term leases.
​

I don't like the "or less" language.

But yeah, I'd argue that the Public Investment Fund of Saudi Arabia has such good connections to the White House and Republicans in particular that it seems unlikely to make that they'd be facing too many CFIUS problems. Saudi Arabia has been sold high-tech U.S. weapons after all.

 

[MXWing]

To be fair, have you ever heard of a car Jay Leno doesn't want to buy.

The roadster looks awesome but Jay Leno shouldn't be the yardstick.

My point is Tesla owners have the same sentiment as Jay Leno, not to buy Tesla's because Jay Leno does it.

I'm fairly active in the Model 3 forums and the reactions I see are the same for those who do the test drives.

"I'll buy it!" "I'll take it!"... trading in Prius and Civics if need be.

Everyone wishes Elon had not sent the tweet when he did.. and wish he did not dive head first into the bears den at New York Times.

What is done is done. Elon can make it up with Q3/Q4 + beyond execution.

It's all us investors can hope for.

 

[hacer]

CFIUS is still a thing.

I don't think the Saudis are going to try and buy a stake they could be forced to divest by the US Government.

Tencent also had their stake revealed but they didn't keep adding after the reveal for probably the same reason.

I don't think they have anything to worry about. Saudi Arabia is the largest provider of emoluments to the president and he is well aware of that.

 

[Fact Checking]

Sorry - M3 deliveries in Q2 were 18,449, not production.

Yeah, deliveries in Q3 are going to go up at least threefold, according to their 55k+ guidance, and indeed to profitability and cash flow that is what matters.

And this isn't just bullish optimism: at this point I find it hard to see a conservative scenario where Tesla wouldn't be profitable in Q3 ...