TSLA Market Action: 2018 Investor Roundtable

[Fact Checking]

What about this disaster: Student Loans Owned and Securitized, Outstanding

Well, the key metric would be distressed debtors in serious delinquency, which appears to be dropping for student loans:

Which is not unexpected with record low unemployment.

The total rise in federal student loan debt would be normal with ~10 year loan terms. The rise began in early 2010:

So I'd expect it to start leveling off in 2-3 years time.

Since these sums are owed to the federal government the recession risks are lower - there's no danger of a debt crisis spreading to the private sector.

So I'd not label it a 'disaster' - in fact I think these student loan debts should be largely forgiven for everyone who got a degree as a result - society is better off with more educated people.

Also, the debt financed undergraduate tuition system in the U.S. is a pretty blatant rip-off right now, which is essentially rent-seeking behavior on the backs of poorer students who often have no choice but to get a student loan.

 

[Papafox]

Agreed, and the ongoing irreversible transition to EVs is feeding on very significant network effects, which are slow to start up but effectively unstoppable once in motion. I'd expect a very quick 'phase change' to happen in the next 1-2 years: support for poison gas emitting vehicles will 'melt catastrophically', and the growing negative social stigma attached to owning and operating an ICE vehicle by choice is going to become very significant to the majority of new car buyers.

The result is going to be that even those are going to try and buy EV vehicles who otherwise neutral or hostile to them - just due to peer pressure.

Interesting side note: the 'rolling coal' incidents are also speeding up the EV conversion process: such disruptive behavior is promoted by far right elements of the U.S. political spectrum who are ... rather friendly with historic users of poison gases in other, even darker contexts - and these people are already stigmatized as out of touch losers. Doubling down on coal and gas is not helping their argument, at all, and will achieve the exact opposite effect.

The law of unintended consequences ...

Put differently: we should think of the EV transition not as a wishful future goal, but that the EV transition is the Fourth Industrial Revolution which is already in full swing. I also think that effects on economies and on everyday life will be much more significant than what even we EV-supporters can imagine today.

Your point from this Friday post is well taken, @Fact Checking. It just occurred to me that people will develop an intolerance for auto exhaust in much the same way they suddenly switched to a position of intolerance with second-hand smoke. All of a sudden, the realization that I don't have to breathe poison changes everything.

Much of the switch in attitudes within the U.S. started in California when smoking was outlawed in restaurants. People suddenly realized how nice it was to dine out and not breathe poison. Before long the safety zone expanded beyond Califonia and restaurants and in short order smokers were expelled from most all public places.

I remember when Northwest Airlines became the first U.S. airline to ban smoking on their domestic flights. Naysayers said that Northwest would regret it immediately because they would lose the entire smoking section of the plane to other airlines. Instead, loads increased at Northwest as passengers from other airlines sought refuge from breathing recirculated smoke in a large aluminum tube, 35,000 feet above the earth. In short order all U.S. airlines dumped their smokers too because non-smoking passengers weren't going to tolerate the poisoning any more. It only took one airline to get the dominos falling, and it will only take one vehicle manufacturer to do the same with clean air vehicles.

Years from now, we'll be able to stroll through Manhattan, or London, or Paris and enjoy the magic of these cities without choking on diesel fumes. By investing in Tesla and actively defending and promoting the company, we are the warriors fighting to make this future become reality. Signs are strongly indicating that we have already tipped the scales in this fight. Take a deep breath, fellow warriors, our time is drawing near.

 

[SpaceCash]

Ever so slightly up, on tiny volume in Frankfurt. 333 USD

 

[nursebee]

i believe that was a data entry error and the Fidelity did not own 20mm, but reduced from 11 to 9mm. If they did sell 11 million shares at a discount while the stock rose from 250 to 350, someone should get be looking for a new job.

I disagree. Here is yahoo data from June.

 

[KarenRei]

I've been pulling out some of my profit in TSLA recently, having been somewhat bearish about the November prospects (I'm more sanguine about December, at least how things look at present). Now that prices are down again, and particularly if they go lower, I'm thinking about using some of that money to buy February call options, to capture the effect of the Q4 earnings report. I've only been in stock previously; for all of you experienced options traders, do you have any tips to suggest?

I'm thinking about building a spreadsheet to represent my view on the probabilities of the company being worth varying amounts at expiry, and then mapping that up against the projected profits (or losses) relative to the current strike prices.

 

[SpaceCash]

I've been pulling out some of my profit in TSLA recently, having been somewhat bearish about the November prospects (I'm more sanguine about December, at least how things look at present). Now that prices are down again, and particularly if they go lower, I'm thinking about using some of that money to buy February call options, to capture the effect of the Q4 earnings report. I've only been in stock previously; for all of you experienced options traders, do you have any tips to suggest?

Personally, this precise moment in the chart feels awkward to me. I usually have a general sense of assurance about movement but right now I feel like it's more of a crapshoot than I normally do. I'm keeping my Feb calls that I've bought over the last several months but do not currently plan to buy more. I wouldn't be shocked to see price stagnate in this area for a month or two, but I hope it doesn't. I feel more secure about my August calls, and my upcoming paychecks will be going toward Jan or Jun 20s.

I don't know if I've really given you anything useful here, but take a stab at it. Options, especially otm like all mine are, are certainly gambling. Obviously, otm offer the highest payoff when they go green.

 

[pz1975]

I've been pulling out some of my profit in TSLA recently, having been somewhat bearish about the November prospects (I'm more sanguine about December, at least how things look at present). Now that prices are down again, and particularly if they go lower, I'm thinking about using some of that money to buy February call options, to capture the effect of the Q4 earnings report. I've only been in stock previously; for all of you experienced options traders, do you have any tips to suggest?

I'm thinking about building a spreadsheet to represent my view on the probabilities of the company being worth varying amounts at expiry, and then mapping that up against the projected profits (or losses) relative to the current strike prices.

If you are looking to capture a rise from the February earnings report, I would recommend Jan 2020 LEAPS for 2 major reasons:

1. If the SP doesn’t end up as high as you had hoped (or ends up lower), you still have many months to recover.

2. Time decay between now and February will take away most of the February call’s theta value. Thus the SP in Feb. would have to be significantly higher than when you bought the option just to break even. Time decay for Jan 2020 LEAPS between now and February is pretty minimal.

 

[Analyst007]

I do not see any reason, if there is no negative news about TSLA, why it should go below 300 USD again. Therefore, I currently see the zone 300 - 320$ as an optimal buying zone. 320-350$ is unsure about the further direction (depending on market) and above 350$ I see a good selling zone, but it might of course go up to 380-400$ if the market recovers isself.

However, nobody thought that TSLA would go to 250$ again after Q2 when the stock price hit 385$ - but it happened. So anything can happen.

 

[SpaceCash]

I do not see any reason, if there is no negative news about TSLA, why it should go below 300 USD again. Therefore, I currently see the zone 300 - 320$ as an optimal buying zone. 320-350$ is unsure about the further direction (depending on market) and above 350$ I see a good selling zone, but it might of course go up to 380-400$ if the market recovers isself.

However, nobody thought that TSLA would go to 250$ again after Q2 when the stock price hit 385$ - but it happened. So anything can happen.

This is probably pretty levelheaded advice.
If price does stagnate in a 320-35x zone, I wonder if shorts will start to pile back in again. They've been a little quiet lately and seem to be covering a little more seriously. I am pretty sure that Q4 will be more than rock solid, and although the shorty narrative is composed of perpetually moving goalposts and outright lies, I just don't see them surviving after Q4 report. Especially if TSLA is indeed added to the S&P 500 at this time (dispute over whether it requires 4 consecutive profitable quarters or simply a net profitable year notwithstanding). This last Q was easy for me to play, and for the moment I admit I don't really know what I'm looking for in the chart. The market hasn't been helping me call anything recently though.

 

[shlokavica22]

I've been pulling out some of my profit in TSLA recently, having been somewhat bearish about the November prospects (I'm more sanguine about December, at least how things look at present). Now that prices are down again, and particularly if they go lower, I'm thinking about using some of that money to buy February call options, to capture the effect of the Q4 earnings report. I've only been in stock previously; for all of you experienced options traders, do you have any tips to suggest?

I'm thinking about building a spreadsheet to represent my view on the probabilities of the company being worth varying amounts at expiry, and then mapping that up against the projected profits (or losses) relative to the current strike prices.

Look for Delta and IV.
It is also important to decide whether it will be a higher risk "bet", or more of a "stock replacement" position.

"Lottery ticket" play counts on sudden jump in the price. Because the risk is higher, the size of the position is smaller (more bets, more chances). On one hand you expect, say 15-20% jump, but on the other you are fine losing all the money (don't minding theta decay).

"Stock replacement" increases your exposure, but at the same time can be very secure (theta decay very insignificant).

 

[vigleik]

I disagree. Here is yahoo data from June.
View attachment 352241

Why do you continue quoting Yahoo after people have explained to you that it’s a mistake? If you want to make your case you need to quote a more authoritative source. I’ll start:

EDGAR Filing Documents for 0000315066-18-002220

(I appreciate the irony in calling the SEC a more authoritative source. But I believe this is the form Yahoo attempted to extract their data from.)

It’s possible that I don’t understand how these 13F forms work, and I’m happy to be proven wrong. With actual official filings.

 

[lklundin]

My broker (UPI) news feed says VW BOUGHT enough batteries for 50M cars, economy of scale enough to surpass others.

If that is true, one need to wonder over how many years they would be delivered and from when.

With current annual sales at about 10M cars, the above would be for 5 years of current sales.

If each car had a small battery, say 40 kWh like the first, unpopular Model S, but maybe enough for a subcompact car, then that would be 2 TWh of batteries. A more usable 60 kWh would be 3TWh, while 80 kWh to compete more directly with Model 3 would be 4 TWh of batteries.

Over 5 years, that would require an annual delivery of between 400 and 800 GWh of batteries.

I believe GF1 is or recently was producing batteries at a rate of 20 GWh/year.

So the above claim is equivalent to VW getting five years of all the output from the equivalent of somewhere between 20 to 40 gigafactories.

This extra production capacity does simply not exist at this time. So the claim can only start to be true after the years it would take to get 20 - 40 gigafactories ramped up to full production.

If VW were to publish guidance consistent with the above claim, then there should be grounds to sue them for willfully misleading the investors.

PS. If we estimate the current, global pool of ICEs to 2 billion, and assume that the current annual, global car production of 100 million is replaced by the same annual production of BEVs, each with a 50 kWh battery, then an annual battery production of 5 TWh is needed to replace all ICEs (over 20 years). It would take 100 gigafactories each producing 50 GWh/year to manage that. So even with lots of competition, there is plenty of market for Tesla. In fact, for the sake of getting to sustainable transportation, we better well hope for the competition to start building battery factories.

 

[KarenRei]

It is also important to decide whether it will be a higher risk "bet", or more of a "stock replacement" position.

I still have stock. I'm looking to take part of the money that I pulled out before the stock decline, if I feel the prices are good enough, to add a higher risk/higher reward investment - money that I'm fine with losing should that be what happens, but for which the probability-weighted return is highest.

 

[Ellec]

If you are looking to capture a rise from the February earnings report, I would recommend Jan 2020 LEAPS for 2 major reasons:

1. If the SP doesn’t end up as high as you had hoped (or ends up lower), you still have many months to recover.

2. Time decay between now and February will take away most of the February call’s theta value. Thus the SP in Feb. would have to be significantly higher than when you bought the option just to break even. Time decay for Jan 2020 LEAPS between now and February is pretty minimal.

You're going to be paying a hefty premium though, I've rolled all my options to June 19's which expire on 21st of June.

It's a compromise between lower premium/higher leverage but enough time to absorb the following positive outcomes

• Three sequential profitable quarters
• Possible announcement of inclusion into S&P
• Model Y unveiling (possible Pickup too)
• Reservation figures for Y/P could be included in Q1 2019 letter (Usually start of May)
• March 2019 $900M debt resolved
• Model 3 becoming the best selling car in the US
• Progress on China GF
• The announcement of European GF
• Further announcements at the Shareholders meeting.
• Because of the above a partial or full unwinding of the short interest

 

[shlokavica22]

I say only "part" (~$20k) as I had overexposed my position before the Q3 report. Which I'm glad I did, but still, one sleeps better at night when they're not overexposed to a single stock!

For the $20K risk, what is the return you would like to get?

 

[KarenRei]

what is the return you would like to get?

Maximal probability-weighted. I've laid out a table of what I personally feel the probabilities of TSLA ending up at a given price at expiry in February would be (rather pessimistic due to the macro environment, and with a lot of uncertainty - highest probability at $395, half probabilities at $465 and $325... 1% "black swan" chance of being under $140, 1% chance of being over $580)

 

[Analyst007]

Maximal probability-weighted. I've laid out a table of what I personally feel the probabilities of TSLA ending up at a given price at expiry in February would be (rather pessimistic due to the macro environment, and with a lot of uncertainty - highest probability at $395, half probabilities at $465 and $325... 1% "black swan" chance of being under $140, 1% chance of being over $580)

"rather pessimistic" and you are allocating half probabilities at 465$ and 325$? The current SP sits at 330$. I would call that scenario rather optimistic, even very optimistic. I would allocate the probability for expiry in February like follows:

7.5% probability 250$
12.5% probability 290$
17.5% probability 315$
25% probability 337.5$
17.5% probability 370$
12.5% probability 400$
7.5% probability 440$

Assumptions
- With a probabiliy of 62.5%, the price will be over 337.5$.
- With a probability of 37.5%, the price will be below 337.5$.
- With a probability of 20%, the price will be over 400$.

What price does this distribution lead to "probability-adjusted" for end of February (expiry)?

342.25$

I call that scenario realistic. You have to consider potential negative and positive news as well as the overall market sentiment.

 

[nursebee]

Why do you continue quoting Yahoo after people have explained to you that it’s a mistake? If you want to make your case you need to quote a more authoritative source. I’ll start:

EDGAR Filing Documents for 0000315066-18-002220

(I appreciate the irony in calling the SEC a more authoritative source. But I believe this is the form Yahoo attempted to extract their data from.)

It’s possible that I don’t understand how these 13F forms work, and I’m happy to be proven wrong. With actual official filings.

I am not sure how to respond to this.

For years I have followed institutional ownership of stocks. Principally this is through the easily layed out NASDAQ website. I posted a snip from this site suggesting that FIDO sold a *sugar* ton of stock last quarter. Someone suggested this was not accurate. It is based upon the 13F filings and can be seen here: https://www.nasdaq.com/symbol/tsla/institutional-holdings

So, if they doubted that, I then posted showing what the June holdings were based upon a different site, yahoo. To suggest that I"keep quoting yahoo" after people have "splained" this to me is factually innacurate and ineffectively distracts from the fact that one of the largest institutions involved in the market sold off a major portion of their longstanding holdings.

You can choose to ignore this if you wish.

If you want a third source: Shareholder Overview for TSLA Tesla Inc including Fund Owner Activity, Style, Equity & Debt Ownership, and Enterprise Value

 

[KarenRei]

"rather pessimistic" and you are allocating half probabilities at 465$ and 325$? The current SP sits at 330$. I would call that scenario rather optimistic, even very optimistic. I would allocate the probability for expiry in February like follows:

7.5% probability 250$
12.5% probability 290$
17.5% probability 315$
25% probability 337.5$
17.5% probability 370$
12.5% probability 400$
7.5% probability 440$

Assumptions
- With a probabiliy of 62.5%, the price will be over 337.5$.
- With a probability of 37.5%, the price will be below 337.5$.
- With a probability of 20%, the price will be over 400$.

What price does this distribution lead to "probability-adjusted" for end of February (expiry)?

342.25$

I call that scenario realistic. You have to consider potential negative and positive news as well as the overall market sentiment.

You assign your maximal probability that the stock will remain almost precisely where it is today, after having a second profitable quarter and the death of the "Q3 was a one-time engineered profit" bear thesis? That's... curious. You must be extremely pessimistic about the macro environment. Why would you even own TSLA if you felt it wasn't going to move meaningfully positive this quarter?

I think most people here are well more bullish than I am, with all of the talk about huge short squeezes and the like. But I could be wrong about that; perhaps the uber-bulls are just more vocal.

 

[FrANce]

Your point from this Friday post is well taken, @Fact Checking. It just occurred to me that people will develop an intolerance for auto exhaust in much the same way they suddenly switched to a position of intolerance with second-hand smoke. All of a sudden, the realization that I don't have to breathe poison changes everything.

Much of the switch in attitudes within the U.S. started in California when smoking was outlawed in restaurants. People suddenly realized how nice it was to dine out and not breathe poison. Before long the safety zone expanded beyond Califonia and restaurants and in short order smokers were expelled from most all public places.

I remember when Northwest Airlines became the first U.S. airline to ban smoking on their domestic flights. Naysayers said that Northwest would regret it immediately because they would lose the entire smoking section of the plane to other airlines. Instead, loads increased at Northwest as passengers from other airlines sought refuge from breathing recirculated smoke in a large aluminum tube, 35,000 feet above the earth. In short order all U.S. airlines dumped their smokers too because non-smoking passengers weren't going to tolerate the poisoning any more. It only took one airline to get the dominos falling, and it will only take one vehicle manufacturer to do the same with clean air vehicles.

Years from now, we'll be able to stroll through Manhattan, or London, or Paris and enjoy the magic of these cities without choking on diesel fumes. By investing in Tesla and actively defending and promoting the company, we are the warriors fighting to make this future become reality. Signs are strongly indicating that we have already tipped the scales in this fight. Take a deep breath, fellow warriors, our time is drawing near.

So well said. In addition, imagine the magic of Manhattan, London or Paris without the noise that ICE cars produce. On Bastille Day, there's a ban for cars in Paris's centre. The resulting silence is truly phenomenal and an amazing experience. Once the festivities are over and the cars come back in, you can hear their roar from far away. In an instant, everything is back to being loud, smelly and unpleasant. EVs will reduce stress levels and increase happiness, in addition to the obvious health and evironmental benefits.