TSLA Market Action: 2018 Investor Roundtable

[bdy0627]

So my guess on SP movement today is that the market views the mid-range release as a sign of weak demand, views the removal of FSD from the ordering process as a sign that Tesla is scrapping FSD plans, coupled with some classic shorting. That sound about right to others?

Well, that news came out yesterday and TSLA was up with the Nasdaq at the open. If it was clearly negative then the stock would have been down in premarket trading already. I really think the larger story today is the huge volume of puts expiring.

 

[neroden]

Yes, it's the Marain Alphabet:

The image:

These mugs are only issued to Special Circumstances agents.

The fragment decodes to: "ELON M...", but unfortunately we don't have the rest of the text, so we'll probably never know what it says!!

Oh. He's just joking that he's a Special Circumstances agent -- a representative from a more well-adjusted, more perfect society attempting to improve barbaric, backward cultures through intervention. I can see why he's making that joke, given Tesla's position vs. the barbaric, backward fossil fuel worshippers running the US, Australia, Russia, Japan, etc...

 

[j6Lpi429@3j]

how can so many investors be so stupid. Uber are talking about a 110 billion dollar float, and people are meanwhile selling the fastest growing most innovative car company on earth? People are nuts. Methinks Q3 earnings may surprise a lot of idiots who only ever read biz insider and seeking alpha.

 

[Cherry Wine]

Yes - take a look at the charts for support levels. Big money has been strongly supporting the stock at the $250ish level. Things do change of course if the whole market looks like it's heading down. So far, it has not changed that support level for TSLA, but it looks like we may be heading for yet another retest.

@bdy0627

My .02: I think if the market turns sharply downward, things could get ugly for TSLA today based on its movement juxtaposed with NASDAQ early this morning.

 

[tivoboy]

So my guess on SP movement today is that the market views the mid-range release as a sign of weak demand, views the removal of FSD from the ordering process as a sign that Tesla is scrapping FSD plans, coupled with some classic shorting. That sound about right to others?

I don't think it means that they are scrapping FSD plans or that the market thinks that, but by simply removing the FSD option from pricing - or at least regular order options - its clear that the (I think 8%+ of orders) FSD premium they were getting in cash flow is going to be gone for a while. Many analysts (the bullish ones at least) had projections that FSD bundled orders were going to INCREASE and it would drive ASP per vehicle even higher. At least from a cash flow standpoint, most likely not from a GAAP accounting standpoint due to revenue recognition requirements.

So, it's a sign of less $$ coming in. Its' certainly model-able.

A bigger issue though for FSD is that I think it's overall release IS delayed. Internally, many staff changes and departures in that area and they may be losing the balance of power that they once had in the R&D and technology space for the true Full Self Driving requirements. And to release it is still going to be a bit of a regulatory mine-field that I don't think ANY OEM or R&D group has fully worked through yet. They CANNOT simply put it out there even if they THINK they can provide it. It's IMHO at least 18-24 months from a limited roll-out at best. SOME minor features, sure. Call my car from the garage and pick me up right in front of the symphony - YEARS out.

 

[KarenRei]

Sæll.... under $256 now? Didn't think I'd need to have buy orders in place for today, but.... (contacting my broker just in case...)

 

[emir-t]

When I first heard to MR news I thought it was fantastic as a Tesla fan. I do however understand people's concern as we all thought demand was fully booked until the end of 2018. If this was the case though, wouldn't Tesla just open orders for Europeans and gauge demand there? They could've just said deliveries in Jan 2019. Demand in Europe for the Model 3 will be ridiculous.

It could be that they have cell shortages until the end of 2018 so as some other people here suggested logic here could be that produce 5MR for the cell count of 4LR. On reddit I posted my analysis for the new architecture guesstimates. Results seem to be that they use 786 less cells per car. So it will be a 20% cost saving for only 10% less revenue.

I think I'll buy calls for after earnings towards close. (11/9? 11/16?)Any ideas for what strike price it should be? I'm thinking 275 or 280.

 

[Cherry Wine]

Well, that news came out yesterday and TSLA was up with the Nasdaq at the open. If it was clearly negative then the stock would have been down in premarket trading already. I really think the larger story today is the huge volume of puts expiring.

Good point.

 

[neroden]

The IV continues to go down, even though I'd expect IV to go up or, more reasonably, stay up as we are 2 to 3 weeks from earnings date. And, I should note, the HV continues to climb.

Well, 80% IV is complete madness, so it's probably a certain amount of mean-reversion.

 

[larmor]

GPUs are pretty cost ineffective these days for mining.

Having said that, if you knew someone who could supply a lot of free electricity using solar and storage.... yeah, the payoff window to build to facility to run all those AP2/2.5 boards as a massive mining rig will be way too long to be worth doing.

Maybe the roof of the biggest building in the world... Just sayin'

 

[Drax7]

All the car stocks today are sharply lower, dragging tesla down

 

[Cherry Wine]

When I first heard to MR news I thought it was fantastic as a Tesla fan. I do however understand people's concern as we all thought demand was fully booked until the end of 2018. If this was the case though, wouldn't Tesla just open orders for Europeans and gauge demand there? They could've just said deliveries in Jan 2019. Demand in Europe for the Model 3 will be ridiculous.

It could be that they have cell shortages until the end of 2018 so as some other people here suggested logic here could be that produce 5MR for the cell count of 4LR. On reddit I posted my analysis for the new architecture guesstimates. Results seem to be that they use 786 less cells per car. So it will be a 20% cost saving for only 10% less revenue.

I think I'll buy calls for after earnings towards close. (11/9? 11/16?)Any ideas for what strike price it should be? I'm thinking 275 or 280.

Today could be a very good day to gamble on some calls. But make no mistake -- would definitely be a gamble.

 

[ZsoZso]

In addition to pulling a demand lever for the US sales in Q4 by reducing the entry price, the lemur (3MR) can also be a tweak to increase production throughput -- assuming cell production was a recent bottleneck. Consuming fewer cells per car allows them to produce more cars from the same number of cells.

 

[Boomer19]

how can so many investors be so stupid. Uber are talking about a 110 billion dollar float, and people are meanwhile selling the fastest growing most innovative car company on earth? People are nuts. Methinks Q3 earnings may surprise a lot of idiots who only ever read biz insider and seeking alpha.

again, unfortunately it doesn’t matter. the cause and effect we are trained to recognize isn’t true at all. the stock needs to be suppressed in order to make money for the market manipulators. so it will be until it isn’t.
it sucks, makes me angry, but it doesn’t matter.

 

[neroden]

BTW., also note that the 2019 January 18 PUT options open interest is insanely high, it represents over 80% of all 2019 options at the moment:

2018/Nov/23:  PUTs:     2,034 ; CALLs:     3,471
2018/Nov/30:  PUTs:       943 ; CALLs:       862
2018/Dec/21:  PUTs:    97,132 ; CALLs:    62,382
2019/Jan/18:  PUTs:   477,119 ; CALLs:   224,213
2019/Feb/15:  PUTs:     9,168 ; CALLs:    15,057
2019/Mar/15:  PUTs:    77,956 ; CALLs:    40,668
2019/Jun/21:  PUTs:    69,954 ; CALLs:    43,403
2019/Aug/16:  PUTs:    20,879 ; CALLs:    12,620

This means that the moment the 2019/Jan/18 options expire, a lot of TSLA short inventory held by market makers might be freed up - i.e. TSLA might be bought and even of the 2019/Jan expiry closing price will be plaid to force maximum pain, the next expiries won't be nearly as constrained and the stock price might catch up to real valuation and expectations ...

The Feb/15 expiry will also include the pricing of the Q4 earnings report.

Just for kicks, here's the open interest straddle table of the January expiries:

 PUT $  3:    297, CALL $  3:      2
 PUT $  5:     36, CALL $  5:      0
 PUT $  8:     10, CALL $  8:      0
 PUT $ 10: 35,186, CALL $ 10:      2
 PUT $ 10:     84, CALL $ 10:    112
 PUT $ 13:     30, CALL $ 13:     35
 PUT $ 15:  2,090, CALL $ 15:      1
 PUT $ 15:  2,238, CALL $ 15:     28
 PUT $ 17:     90, CALL $ 17:     55
 PUT $ 20: 19,572, CALL $ 20:      3
 PUT $ 20:     55, CALL $ 20:    395
 PUT $ 22:     10, CALL $ 22:    347
 PUT $ 25: 10,989, CALL $ 25:      0
 PUT $ 25:    127, CALL $ 25:    282
 PUT $ 27:     24, CALL $ 27:  1,239
 PUT $ 30:  2,398, CALL $ 30:      0
 PUT $ 30:     21, CALL $ 30:    563
 PUT $ 35:  3,437, CALL $ 35:      0
 PUT $ 35:     24, CALL $ 35:    275
 PUT $ 40:  2,276, CALL $ 40:     10
 PUT $ 40:     31, CALL $ 40:    163
 PUT $ 45:  2,997, CALL $ 45:      7
 PUT $ 50: 75,540, CALL $ 50:      8
 PUT $ 55:  3,579, CALL $ 55:      3
 PUT $ 60:  2,500, CALL $ 60:      0
 PUT $ 65:    825, CALL $ 65:      1
 PUT $ 70:  6,496, CALL $ 70:      7
 PUT $ 75:  8,014, CALL $ 75:    209
 PUT $ 80:  4,550, CALL $ 80:    160
 PUT $ 85:    759, CALL $ 85:    319
 PUT $ 90:  3,145, CALL $ 90:    326
 PUT $ 95:  2,257, CALL $ 95:    219
 PUT $100: 48,048, CALL $100:  3,438
 PUT $105:  1,418, CALL $105:    106
 PUT $110:  3,279, CALL $110:    402
 PUT $115:  1,417, CALL $115:     74
 PUT $120: 14,317, CALL $120:     57
 PUT $125:  1,799, CALL $125:    380
 PUT $130:  2,465, CALL $130:     56
 PUT $135:    289, CALL $135:     21
 PUT $140:  1,963, CALL $140:     23
 PUT $145:    959, CALL $145:     24
 PUT $150: 17,223, CALL $150:    890
 PUT $155:  1,104, CALL $155:     25
 PUT $160:  1,872, CALL $160:    238
 PUT $165:  2,260, CALL $165:      4
 PUT $170:  5,108, CALL $170:    638
 PUT $175:  3,272, CALL $175:     92
 PUT $180:  3,245, CALL $180:    523
 PUT $185:    938, CALL $185:    391
 PUT $190:  2,084, CALL $190:  1,967
 PUT $195:  1,982, CALL $195:    370
 PUT $200: 33,661, CALL $200:  2,584
 PUT $210:  6,128, CALL $210:  1,246
 PUT $220:  8,631, CALL $220:    985
 PUT $230: 12,446, CALL $230:  1,830
 PUT $240:  9,261, CALL $240:  1,584
 PUT $250: 11,835, CALL $250:  2,432
 PUT $260:  6,018, CALL $260:  1,675
 PUT $270:  8,160, CALL $270:  2,452
 PUT $280:  9,234, CALL $280:  2,377
 PUT $290:  4,494, CALL $290:  3,203
 PUT $300: 11,123, CALL $300: 12,116
 PUT $310:  4,198, CALL $310:  3,916
 PUT $320:      0, CALL $320:      0
 PUT $320:  3,662, CALL $320:  3,678
 PUT $330:  5,680, CALL $330:  6,822
 PUT $340:      0, CALL $340:      0
 PUT $340:  5,062, CALL $340:  6,576
 PUT $350:      0, CALL $350:      0
 PUT $350: 10,037, CALL $350: 14,573
 PUT $360:      0, CALL $360:      0
 PUT $360:  3,324, CALL $360:  9,788
 PUT $365:    923, CALL $365:  1,599
 PUT $370:  1,671, CALL $370:  3,307
 PUT $375:  1,144, CALL $375:  2,728
 PUT $380:    688, CALL $380:  4,354
 PUT $385:    575, CALL $385:    917
 PUT $390:    408, CALL $390:  3,622
 PUT $395:    201, CALL $395:  1,299
 PUT $400:  3,030, CALL $400: 14,777
 PUT $405:    167, CALL $405:    950
 PUT $410:    998, CALL $410:  2,657
 PUT $415:    243, CALL $415:    859
 PUT $420:  1,109, CALL $420:  7,098
 PUT $430:    649, CALL $430:  2,937
 PUT $440:    911, CALL $440:  2,766
 PUT $450:  1,166, CALL $450:  7,207
 PUT $460:    373, CALL $460:  1,488
 PUT $470:    475, CALL $470:  1,874
 PUT $480:    424, CALL $480:  2,736
 PUT $490:    197, CALL $490:  1,493
 PUT $500:  3,147, CALL $500: 12,733
 PUT $510:     21, CALL $510:    574
 PUT $520:     10, CALL $520:  1,355
 PUT $530:      0, CALL $530:    598
 PUT $540:     13, CALL $540:    465
 PUT $550:    463, CALL $550:  3,337
 PUT $560:      0, CALL $560:  1,169
 PUT $570:      0, CALL $570:    311
 PUT $580:     51, CALL $580:  1,966
 PUT $590:      7, CALL $590:    826
 PUT $600:    339, CALL $600: 26,120
 PUT $610:      3, CALL $610:    587
 PUT $620:      1, CALL $620:    715
 PUT $630:      0, CALL $630:    383
 PUT $640:      0, CALL $640:    488
 PUT $650:      5, CALL $650:  3,080
 PUT $660:     22, CALL $660:    553
 PUT $670:      0, CALL $670:    818
 PUT $680:      2, CALL $680: 11,140

Very obvious overlap in short and long expectations, no easy equilibrium price visible at all. Volatility secured!

Random observations:

• The total PUT interest is 477K contracts, which is 47.7 million shares-equivalent (!) - this has risen by 20% in the last 1.5 months alone ...
  
• There's a $100m short PUT bet of ~300k shares-equivalent with a strike price of $500 (!!) - that's going to hurt big time if TSLA makes any big jump in valuation before January 18 ...
• There's a similar ~$100m PUT bet at $400 strike price as well.
  
• There's also ~$330m worth of PUT pain at $300 and ~$350m worth of PUT pain at $350 strike prices
• It's all heavily biased to the short side: the PUT/CALL ratio is 2.1x, so the market-maker inventory hedging flow will be substantial IMO.

Of course all of that is only an upside for your position if case the bankwuptcy PUT bets do not materialize )), and if there are no global economic catastrophes.

You are assuming that the non-market-makers are primarily long on options. While this is *usually* the case, you can't prove it. I am not the only person who's been selling TSLA puts as a profitable activity. The net market maker exposure could be a lot less than you think.

 

[Boomer19]

I don't think it means that they are scrapping FSD plans or that the market thinks that, but by simply removing the FSD option from pricing - or at least regular order options - its clear that the (I think 8%+ of orders) FSD premium they were getting in cash flow is going to be gone for a while. Many analysts (the bullish ones at least) had projections that FSD bundled orders were going to INCREASE and it would drive ASP per vehicle even higher. At least from a cash flow standpoint, most likely not from a GAAP accounting standpoint due to revenue recognition requirements.

So, it's a sign of less $$ coming in. Its' certainly model-able.

A bigger issue though for FSD is that I think it's overall release IS delayed. Internally, many staff changes and departures in that area and they may be losing the balance of power that they once had in the R&D and technology space for the true Full Self Driving requirements. And to release it is still going to be a bit of a regulatory mine-field that I don't think ANY OEM or R&D group has fully worked through yet. They CANNOT simply put it out there even if they THINK they can provide it. It's IMHO at least 18-24 months from a limited roll-out at best. SOME minor features, sure. Call my car from the garage and pick me up right in front of the symphony - YEARS out.

if they can keep karpathy team together with the chip guys i think that will go along way to having a decent product. i’d rather them not release something unless it’s clearly compelling.
i don’t give a damn what the media and analysts say in the meantime. they add 0 value.

 

[gtrplyr1]

this stock is just ugly .... and will continue to be ugly until NUMBERS come in.

Personally I think this "mid range" model is a brilliant idea ... it just gives people more options based on their budget and there are many who would pay a little extra for a little more range ... the 9k was tough to reconcile if you did not need the additional milage. I happen to have 240 in my garage already and would not need the additional long range milage as I can charge all the time with ease, but I would actually pay the extra for the mid range model.

I'm really thinking about ordering one as I really want to get the additional $3,750 from the tax credit .... at that mid range model the tax credit pays for the extra range AND I was really wanting the white interior ..... the black and white interior option may just push me over the edge.

In any case ... as a long I'm just waiting it out but it's not fun ...... half hearted cheers to the longs !

 

[elasalle]

.Tesla Short Seller Warns of `Massive' Supply-Chain Disruption
Bloomberg) -- Short seller Fahmi Quadir, who’s betting against Tesla Inc., said the carmaker faces risks to its supply chain because some vendors haven’t been getting paid and others have been taking liens out against the company.

Blah Blah

Tesla didn’t immediately respond to requests for comment. Its shares fell as much as 1.8 percent to $259.11 as of 11:13 a.m. in New York. The stock is down about 17 percent this year.

 

[bdy0627]

PYPL had good earnings and has managed to stay up over 8% today. That's good to see.

 

[neroden]

The stock has not been "flat", it's moved all over the place, because it's a volatile stock, as we all know.

Indeed, while my TSLA stock hasn't done much, I've made my income for the year's expenditures off of selling put options which expire, or are bought back for far less than they were sold for. Volatility is my friend...