TSLA Market Action: 2018 Investor Roundtable

[defc0n]

exciting idea, but can Tesla really grow at 100% for 5 more years? They would be 120 billion by 2021, and ~500 billion in 2023.
I hope so, I’d might even retire a couple years early.

The only path to $500b by 2023 I see is by having huge progress in autopilot.

 

[Carl Raymond]

Erm, no he wasn't... Was ghost-written...

Donald F. Trump is actually incapable of writing...

Some may agree, some may covfefe.

 

[Open Interest]

Stock settlement is 3 days, while options settlement is 1 day. After you sell stock, you don't have money to buy options for two more days, so that technicality may be a problem, unless you're trading around the edges. Hard to move the whole portfolio quickly. Opposite is not a problem.

You can buy stock or options with your sale proceeds before the settlement period is up but you cannot sell what you just purchased until the settlement date.

 

[Zhelko Dimic]

You can buy stock or options with your sale proceeds before the settlement period is up but you cannot sell what you just purchased until the settlement date.

Not with my brokerage TD Direct in Canada, you can't.
That lesson cost me only $USD900 something when they sold my holdings underneath me that same day resulting in direct loss.
Perhaps US situation is different, but effectively brokerage is lending you money for two days if they allow it.

 

[Open Interest]

Not with my brokerage TD Direct in Canada, you can't.
That lesson cost me only $USD900 something when they sold my holdings underneath me that same day resulting in direct loss.
Perhaps US situation is different, but effectively brokerage is lending you money for two days if they allow it.

Your brokerage sold the position you opened because you did not observe the settlement date? Ouch! I’ve done this on a couple of occasions and I received a warning that there would be consequences if I sold, but it’s allowed here.

 

[Zhelko Dimic]

Your brokerage sold the position you opened because you did not observe the settlement date? Ouch! I’ve done this on a couple of occasions and I received a warning that there would be consequences if I sold, but it’s allowed here.

Yeah, no tolerance in a non-margin account.
This was RRSP account (Canada), I think like your IRA(?), there are more rules around it, that could be the reason (shrug).

 

[Fact Checking]

I've lived through 50% inflation a day, and there is nothing worse economically...

Yugoslavia (and Argentina, Greece, Zimbabwe, pre WWII Germany, etc.) had debt in another country's currency. Yugoslavia's debt was denominated in U.S. dollars - you cannot print your way out of that kind of debt trap by printing dinars.

Yugoslavia's GDP in 1980 was above $100 billion dollars - their debt of $20 billion should not have been a problem (~20% of GDP), had it been denominated in dinars.

@neroden's point is that national debt in your own currency is generally not a problem:

• Great Britain had 300% GDP worth of national debt after the war, denominated in the pound sterling, and handled it without a debt crisis or hyperinflation.
• The U.S. had 120% of GDP worth of national debt in 1946 and grew out of it without a debt crisis or hyperinflation.

To get back on topic: if Tesla's ~$10b long term debt was denominated in 150,000 Tesla Model 3's, two quarters of production at 5k/week, it would be a lot harder to FUD about it, right?

 

[AWDtsla]

Yugoslavia (and Argentina, Greece, Zimbabwe, pre WWII Germany, etc.) had debt in another country's currency. Yugoslavia's debt was denominated in U.S. dollars - you cannot print your way out of that kind of debt trap by printing dinars.

@neroden's point is that national debt in your own currency is generally not a problem: Great Britain had 300% GDP worth of debt at a point and handled it.

While not having debt in your own currency is a problem it does not prove that debt issued in your own currency is never problematic. That's one diversion from the theory I originally posed, multiple strawmen in total.

I believe my description as leverage on future inflation is accurate. Nothing wrong with leverage, as long you as you can delever at the appropriate time, and risks are under control. The former isn't happening, and the latter is an open question. What are the range of potential outcomes for people who use or invest in USD? Makes no difference, or wait 200 years for normal inflation to make it disappear are not believable or interesting answers.

 

[TNEVol]

Just an observation. On my wife's trip to church this morning she passed 3 trucks loaded with model 3s in 40 miles on I40. They did not appear to be traveling together and she passed another one coming home. She said she always sees 1 or more whenever she has been on the interstate in the last few weeks. This is the second time she has seen 3.

 

[SpaceCash]

You can buy stock or options with your sale proceeds before the settlement period is up but you cannot sell what you just purchased until the settlement date.

This is my situation with etrade. I think it's a perk that comes with marginability or options trading, which both need to be requested via extra waivers/paperwork built into the app.

 

[traxila]

Just an observation. On my wife's trip to church this morning she passed 3 trucks loaded with model 3s in 40 miles on I40. They did not appear to be traveling together and she passed another one coming home. She said she always sees 1 or more whenever she has been on the interstate in the last few weeks. This is the second time she has seen 3.

SHORTSVILLE TIMES ALERT:

Tesla's preoccupation with lack of trucking identified as fraudulent non stop trucking of Tesla cars to no destination, circling the US relentlessly. Reason they need more carriers is that they fill them up and just let em ride! Forever! They figured out they had to move them when our intrepid detectives let everyone know about the parking lots of Teslas just sitting there.

The truth is out! The Ponzi scheme is on the verge of collapse.

 

[Fact Checking]

While not having debt in your own currency is a problem it does not prove that debt issued in your own currency is never problematic.

I didn't say that, I just pointed out these historic facts:

• all the historic episodes of hyperinflation that were pointed out in the discussion (and a few others I added) involved national debt in a currency the country did not have control over.
• I also listed two major countries with episodes of ridiculously high national debt where neither hyperinflation nor a debt crisis triggered.

This historic track record strongly supports @neroden's suggestion:

'That's when you "pay off" the debt with newly-printed non-interest-bearing money. Which is why we should be doing that already, frankly. The only economic effect is that the government stops paying interest.'
​

(The other effect would be economic growth, up to the current capacity of the economy. Beyond that it's inflationary.)

 

[Artful Dodger]

After he said that it was reportedly silent in the room for a few long seconds..... and there is no report that Diess gave an answer on that question at all.

Altmaier rügt Autohersteller: „Wann bauen Sie ein Elektroauto, das nur halb so sexy ist wie ein Tesla?“

das Heimchen

 

[Words of HABIT]

The general vibe on TMC as well as news outlets is sounding much more positive since the profit announcement of Q3 F18. The tide is slowly changing.

At $350, TSLA is were it was at the time of Elon's consider going private - funding secured tweet. What has happened since then? Confirmation of quarterly profit and a self sustaining Tesla enterprise. There is a lot of ground to make up as this is not yet carried in the share price. IMHO, I expect a rise now through Q4 F18 conference call ($420 would not surprise me), a drop briefly thereafter on profit taking, and then a climb higher for the foreseeable future as Big Auto panics and missteps over their transition to EVs and Tesla begins to dominate China and European markets as they have proven to do in the US.

There is simply too much good news to hold Tesla down, Tesla is just scratching the surface of possibilities. Expect a wild ride, however the trend is upwards. Not selling my TSLA. Straight shares only. No leverage. No debt. No Worries. NOSMOK3N

Wishing everyone on TMC another great week, and many more to come.

 

[Fact Checking]

For anyone gibbering about Greece, reminder, *Greece can't print euros*. (Well... not without Germany freaking out. Technically they do have printing presses.)

Note that Greece strongly considered printing Euro's in a sense, but they were risking not just Germany's ire (which they can live with), but also being cut off from payment processing systems overnight by the European Central Bank (which they cannot live without).

All ATMs and credit card transactions stopping overnight would have brought Greece's economy to a standstill.

Bringing back a new Drachma was logistically impossible for similar reasons: it takes years to introduce a new currency into the messy spaghetti code of international financial software. You'd think it's straightforward - it isn't.

The Euro was a viral trap in this sense, there's no way to exit the Euro without nuking your own economy.

 

[Carl Raymond]

Fantastic article by @neroden

The Doom Of Fossil Fuel Investments | CleanTechnica

Edit: fantastic in the modern sense of the word, not the original meaning.

 

[bdy0627]

Stock settlement is 3 days, while options settlement is 1 day. After you sell stock, you don't have money to buy options for two more days, so that technicality may be a problem, unless you're trading around the edges. Hard to move the whole portfolio quickly. Opposite is not a problem.

Perhaps this is dependent upon the brokerage, but in my experience the date of settlement only limits your sale of the next purchase to after the settlement date, it doesn't limit the purchase.

 

[tsunamiofhurt]

FYI, the informative part starts a bit after 6:00.

Some commentary on reddit:

After getting wrecked by Crude Oil and Natural Gas this week, “fund manager” James Cordier breaks down during his weekly report (he actually looks like he’s going to hang himself) : wallstreetbets

He got hit by the moves in fossil fuels. Apparently he was selling deep OTM naked puts and deep OTM naked calls and didn't have the capital to cover the costs on the strong moves -- badly overleveraged.

It looks like he lost on the naked calls on NG, which are super dangerous, and didn't have them properly protected with more-distant calls. NG spiked up this week. Simultaneously he had naked puts on oil, which cratered this week.

Never sell naked calls ever, since they're a leveraged version of short-selling. If you're considering doing one, use a call spread instead; still has a chance of losing a lot of money but not *infinite* risk like naked calls.

Naked puts are also very dangerous, although I do sell them; for my TSLA "naked" puts, I have the cash to execute all of them with funds from other investments even if the other investments drop in value by a lot.

I feel sorry for him in some ways, because he actually knows a lot about commodities trading and option selling in particular, but he overleveraged badly and didn't understand the market he was trading in. (Some commenters say that natural gas options/futures are called "widowmaker" trades due to the extremely high volatility spikes. Gunjan Banerji on Twitter )

He also clearly didn't understand the fundamentals of the NG/oil market, but I'm not sure that's what really sank him. The white paper I wrote last March (which I am going to publish soon; it's been "client and friend only" long enough) predicted an eventual drop in oil prices and a subsequent/concommitant rise in NG prices, which are artificially low due to the fracking bubble. So with those as the long-term trends I would never run a trade against the long-term trend. But he didn't know the fundamentals well enough. But it seems like he got sunk mostly by making risky naked call trades in a known-volatile market.

My conclusions: Never trade without knowing the fundamentals, even if you're a short-term technical trader. Never get overleveraged. And never, ever, ever sell naked calls.

Can confirm. I've been on both sides of that trade. Nat gas options are baby widowmakers, power options are much worse ... especially in certain markets (e.g. Northeast U.S. in the winter).

 

[Artful Dodger]

if Tesla's ~$10b long term debt was denominated in 150,000 Tesla Model 3's, two quarters of production at 5k/week, it would be a lot harder to FUD about it, right?

Hi F/C, (how was your weekend?)

I like your analogy, but disagree with some of the calculations:

• The values you use imply a Model 3 ASP around $68K
• Since we're discussing Tesla's long-term debt, let's use Elon's ASP estimate of $43K instead
• This ASP allows for a healthy equilibrium mix of SR, L3MUR, AWD, and P3D
• Your estimate seems to use total sales; we should use Gross Margin (est'd 25%)
• So need 4x the volume of Model 3 sales to earn the necessary income
  
• Terminal production rate is at least 7K/wk from Fremont alone rather than 5K/wk
  
• Much of the debt is GF1 CapEx which will add addtional profits that I'll ignore here
  
• Let's also ignore inflation, trusting incremental efficiencies to fully offset that effect

Running the estimate again with $43K ASP, 25% gross margin, and 7K/wk, that's about $75M/wk gross margin ($900M/Qtr). So that's roughly 133 weeks (11 quarters, or 2.75 yrs) to earn $10B from Model 3.

Note if Fremont can ramp production to a steady state of 8K Model 3s per week, then the est'd time to earn $10B goes down to 10 quarters (2.5 yrs).

Telsa recently stated plans for up to $5-6B CapEx over then next 2 years. After funding that from Model 3 revenue, lets say we use remaining revenue to pay down long term debt (we know some planned CapEx will come from local loans in Shanghai, but for now let's say that China profits pay down China debt first, then go to China R&D, then to additional China CapEx in a closed loop for the forseeable future).

That results in an estimated 6 years for Fremont / Model 3 production to fully pay down Tesla's $10B debt. So the long-term debt is retired by 2024, but the last Senior Note ($1.8B) isn't due until Aug 2025. That's 2 full quarters to spare. Mischief managed.

This simple estimate shows that Tesla can grow at full speed while paying all its debts without any additional borrowing, thanks to Model 3 Production at Fremont alone. Every other source of revenue is pure gravy.

 

[tsunamiofhurt]

Imagine you are reading a book on a park bench and people walking past behind you report to me the page number you are reading. In a scenario like this, the number of people who are reporting the number is not that important. Similarly, my estimates are mostly based on the numerical values of VINs reported and not the number of people who are reporting data.

Disagree that the number of people who are reporting is "not that important". That's like ... super important in inferential statistics.