TSLA Market Action: 2018 Investor Roundtable

[Artful Dodger]

WARNING: WEEKEND OFF-TOPIC:

Attention, please. Fasten your tinfoil hats for this one. What if Porsche/VW are quietly accumulating shares just like the 2008 VW squeeze?

That would be...
....wild speculation
....totally unlikely
....to the taste of Piëch
....possible
....and from a pure egoistic point of view: Awesome!

Hi,

Porsche did two things to force an epic squeeze. First they bought a significant number of VW shares (reducing the effective float). Second they bought Call options for more than 4x the number of shares they held (Billions of Euros worth).

When the stock price reached Porsche's Call strike price, they chose to exercise the options and buy the shares instead of just taking the cash value of the Call options like most investors would do.

In the event, the SP spiked nearly 5x because (almost) no shares were available for sales during the 2 day settlement period for the excercised Calls. That's why Porsche opening move was to reduced the float, and that's why Porsche owns VW.

Zo, how do you say "Margin Call" in German? I'd say "Schachmatt".

Cheers!

 

[avoigt]

That's quite obviously tinfoil hat territory. However, I think statements like these are super important: what we see is how one after the other in the traditional car OEM world sees how Tesla is not just an early mover but has a really great product, too.

I know so many Germans who think that "anybody can do what Tesla is doing if they just wanted to" and "did you see those Tesla panel gaps?!?" - they are used to Chinese companies trying to copy them (and fail in doing so) for decades. So what we are seeing is OEMs who are paying some closer attention for the first time. That leads to statements like the Porsche statement but also to reactions like we have seen from Munro etc.

I could also see some of the OEMs struggling to achieve what Tesla has achieved and so there might be a need to adjust expectations - I think one day we might see a statement like this from Porsche/VW/Audi/BMW: "sure the Tesla is quicker to 60, faster around the track, has better charging - but only our car is a true Porsche/VW/Audi/BMW which has the feel, brand identity and automotive history YOU can expect from your new car!"...

Actually if you read their statements carefully you hear that sound already today. Porsche is extremely loud in calling their EVs a full Porsche, a Porsche feeling, a Porsche DNA, ... an EV but still a true Porsche. The same is valid for Audi.

Its obvious that their believe is that the brand recognition they did build in the last 100 years is what they want to materialize on. Its a paradigm effect that is happening with them. They cannot imagine what worked for 100 years will shift. They are in an echo chamber thats worse the one we are in here. In disruptive markets a long time established brand does loose its merit very quickly if it cannot deliver on promises that go along with the brand recognition established before. You gonna be surprised how quickly a large name can fall.

The first mistake is and has been to believe that an EVs is actually like an ICE car just with another energy source that drives it. Thats a huge mistake to believe in and explains a complete ignorance of what a person feels that drives and experiences an EV.

A second mistake is that people will buy an Porsche EV or Audi EV because of the brand. Brand loyalty is existent and does drive sales in situations where the drive experience is confirmed by the brand you drive. If that is gone and other brands are more cool, more bad ass, more reliable, more safe, more innovative, more fast, more ... whatever that they turn around and leave.

You can learn this from kids. What is the one brand kids are really enthusiastic about? It's Tesla.

 

[EVNow]

Seriously I never understood the "logic" behind Hybids. Since 10 years I call them dead in the water.

Its actually quite a good idea in US - until we have a fast charger with 15 miles all over the country. Ofcourse, when the plugins started around '10 - the battery was like $500 /kWh. So, cost wise it made sense to have a smaller battery that gets used for 90%+ of your trips and a backup ICE for rest of the trips.

Here is a decision tree I had made in 2011

 

[Hock1]

Have to strongly disagree. Some uses of options are almost as safe as stock but more lucrative. For example deep in the money long term options with a distant expiration. For instance if you bought Jan 2020 calls strike 140 you can commit less money per share with almost no extra cost for time premium. Low trading volumes on a down day they can be bought for almost the price of stock less the 140 strike. That allows more leverage. Most option traders want a lot higher leverage. If you hold until near to expiration you can sell for very close to the target price and go out another year or sell some to convert some of the options to shares. Can the stock go lower than 140, of course but not likely. If the stock were to drop materially, paradoxically the option will actually develop a higher time premium

You can strongly disagree all you want. I have 50 years experience as an investor and 25 years as a broker/money manager. I am telling you valuable information. If you don't choose to follow, that's up to you. I have made a life of making big bets on potentially disruptive companies by buying and holding stock for the long term. I have found that it is a rare person who can do this. I have made as much as 30X. I learned that there is no way that you trade anything, options or stock, and beat holding for the long term. Tesla is a stock for the century. I am quite sure, contingent on a lot of things, that Tesla will be a trillion dollar company in the next 5-8 years. That's 16 times today's price. If you keep with your strategy, and you're an exceptional trader, you might double your money. I commend everyone on this board for finding and believing in Tesla. Unfortunately, a small percentage will participate in the wealth that this company will build. GLTA

 

[printf42]

OT alert:

When the stock price reached Porsche's Call strike price, they chose to exercise the options and buy the shares instead of just taking the cash value of the Call options like most investors would do.

In the event, the SP spiked nearly 5x because (almost) no shares were available for sales during the 2 day settlement period for the excercised Calls. That's why Porsche opening move was to reduced the float, and that's why Porsche owns VW.

I read what they bought were not the normal calls publicly traded, theos were some special contracts from banks.
Are you sure the squeeze happened during the settlement/expire days, or just after they announced they had such contracts in hand?

 

[Words of HABIT]

Many compare TSLA to FAANG and OEM stocks on a daily basis. Let's spread the time frame out a little bit, courtesy of Yahoo Finance charts:

TSLA is 10% off ATH of 17 months ago, current valuation first reached 18 months ago.
GOOG is 14% off ATH of 5 months ago, current valuation first reached 5 months ago.
GM is 17% off ATH of 13 months ago current valuation first reached 131 months ago. (January 2011 shortly out of Bankwuptzy)
AAPL is 21% off ATH of 7 months ago, current valuation first reached 11 months ago.
AMZN is 26% off ATH of 3 months ago, current valuation first reached 5 months ago.
NFLX is 30% off ATH of 5 months ago, current valuation first reached 10 months ago.
FB is 52% off ATH of 4 months ago, current valuation first reached 22 months ago.
F is 74% off ATH of 214 months ago, current valuation first reached 375 months ago. (August 1987, 31 years, 3 months ago)

After further review TSLA ain't doing so bad....and is best poised for a rebound IMHO.

 

[Words of HABIT]

Saudi Contractor Defaults on $2 Billion of Debt
SA seeing first signs of trouble of falling oil price?

Paris riots: PM to meet protest groups after worst unrest in decade
Paris riots over fuel taxes.

Interesting times.

 

[Artful Dodger]

WEEKEND OFFTOPIC - Con't

OT alert:

I read what they bought were not the normal calls publicly traded, theos were some special contracts from banks.
Are you sure the squeeze happened during the settlement/expire days, or just after they announced they had such contracts in hand?

Ho, 'course not! Much easier to just go by my (highly variable) remembery than to reread these two excellent articles from shortly after the event!

Cheers!

ivan krstić · code culture » How Porsche hacked the financial system and made a killing

"Adolf Merckle, one of the world’s richest men, committed suicide yesterday by throwing himself under a train, Bloomberg reports. Financial difficulties, and particularly great losses he suffered on Volkswagen stock, are being cited as the key reason he ended his life:

...(full story continues in link above)...

"On paper, Porsche made between €30-40 billion in the affair. Once all is said and done, the actual profit is closer to some €6-12 billion. To put those numbers in perspective, Porsche’s revenue for the whole year of 2006 was a bit over €7 billion.

"Porsche’s move took three years of careful maneuvering. It was darkly brilliant, a wealth transfer ingeniously conceived like few we’ve ever seen. Betting the right way, Porsche roiled the financial markets and took the hedge funds for a fortune.

"Betting the wrong way, Adolf Merckle took his life."​

Also read Porsche reinvents the short squeeze New York Times - Oct 30, 2008

 

[NicoV]

Its actually quite a good idea in US - until we have a fast charger with 15 miles all over the country. Ofcourse, when the plugins started around '10 - the battery was like $500 /kWh. So, cost wise it made sense to have a smaller battery that gets used for 90%+ of your trips and a backup ICE for rest of the trips.

Here is a decision tree I had made in 2011

View attachment 357265

There is a bug in that flow chart: it doesn’t take into account that your other car might also be a short range ev.

 

[sweter]

So if I understand this correctly, to have a VW-like short squeeze on TSLA, somebody actually needs to try to takeover TSLA? Then we should all be hoping and praying that no such thing ever happens! No matter how wealthy it would make any of us in 2 days.

 

[ggr]

OT alert:


Totally agree with this approach, for market related posts, I think we don’t need to tag it, but for any post that is OT, it would help if the first line started with “OT”, including replies in a discussion that has drifted and not quite related to MA anymore.

tl;dr: Please tag “OT” to every post that has drifted, use your judgement.

For the technically oriented: https://www.ietf.org/rfc/rfc3514.txt

 

[Chickenlittle]

You can strongly disagree all you want. I have 50 years experience as an investor and 25 years as a broker/money manager. I am telling you valuable information. If you don't choose to follow, that's up to you. I have made a life of making big bets on potentially disruptive companies by buying and holding stock for the long term. I have found that it is a rare person who can do this. I have made as much as 30X. I learned that there is no way that you trade anything, options or stock, and beat holding for the long term. Tesla is a stock for the century. I am quite sure, contingent on a lot of things, that Tesla will be a trillion dollar company in the next 5-8 years. That's 16 times today's price. If you keep with your strategy, and you're an exceptional trader, you might double your money. I commend everyone on this board for finding and believing in Tesla. Unfortunately, a small percentage will participate in the wealth that this company will build. GLTA

For all that experience remarkably unable to understand equivalence of holding long term deep in the money options to holding stock

 

[Artful Dodger]

WEEKEND OT - Con't

So if I understand this correctly, to have a VW-like short squeeze on TSLA, somebody actually needs to try to takeover TSLA? Then we should all be hoping and praying that no such thing ever happens! No matter how wealthy it would make any of us in 2 days.

Haha, what do you think was happening that caused Elon to send "The Tweet" on Aug 7?

Hint: SAUDIS

Cheers!

 

[Hogfighter]

I agree 100%. If one really wants to build wealth over time, buy stocks and hold; options are a loser's game. Short term trading (i.e. "trading shares") is also a loser's game. AMO.

I disagree 108%.

 

[avoigt]

"More bad news from i-Pace in Norwegian media from November: i-Pace «crushed» in brake test. «The new electric super car i-Pace gets an F in our test of emergency braking systems», rated «worst» of all 25 tested cars."

Tesla Driver ‍ on Twitter

 

[Carl Raymond]

This is a particularly relevant topic to Tesla. I'm surprised no diehard fan has started a similar website to the Model 3 Tracker to show how battery production is due to expand over the next few years. If I knew anything about website development and had some spare time, i would definitely focus on building a site that can aggregate information on factory level production from TMC readers to forecast the growth in this area.

Real competitor expansion is completely hamstrung by increases in battery production. By tracking this at a granular level there is great insight to be gained in competitor plans.

Given Bloomberg's current reporting on M3 numbers, it would not be surprising if they are misguided on the volume numbers they are reporting for battery production.

Also need to consider the emerging market of big stationary storage and how that will impact price and supply to legacy auto.
Tesla has the luxury of being able to dictate the role of GF cell output. Others are at the mercy of the market.

 

[SpaceCash]

So... $100bn valuation before or after new year? Think it'll be a Q4 report hold-out?
Tesla is now too big to fail, in a sea of failures.

 

[BioSehnsucht]

I'll reiterate that one should remember that GF1 does not represent the only cells / packs Tesla will be consuming. Tesla will be consuming large amounts of local Chinese cell production capacity at GF3. So a sizeable bite of that Chinese production will actually go to Tesla.

Do we have anything other than speculation to lead to this conclusion (expecting GF1 not to have excess capacity to ship to GF3, or not ramping cell production in GF3 in time for vehicle production, etc) ?

 

[Carl Raymond]

Neither of those examples were ratified treaties (same goes for Kyoto, before anyone brings that up).

Of course, none of this implies that a Hawaiian district court judge won't rule it unconstitutional, be supported by the 9th Circuit Court of Appeals, only to have their rulings swatted down by the Supreme Court...

The price of withdrawal is ill will and eroded trust internationally.

 

[AudubonB]

You can strongly disagree all you want. I have 50 years experience as an investor and 25 years as a broker/money manager. I am telling you valuable information. If you don't choose to follow, that's up to you. I have made a life of making big bets on potentially disruptive companies by buying and holding stock for the long term. I have found that it is a rare person who can do this. I have made as much as 30X. I learned that there is no way that you trade anything, options or stock, and beat holding for the long term. Tesla is a stock for the century. I am quite sure, contingent on a lot of things, that Tesla will be a trillion dollar company in the next 5-8 years. That's 16 times today's price. If you keep with your strategy, and you're an exceptional trader, you might double your money. I commend everyone on this board for finding and believing in Tesla. Unfortunately, a small percentage will participate in the wealth that this company will build. GLTA

Valuable New Member; noun
(see also "wizened", "old fart", "dry behind the ears")

Definition -
"Someone who agrees with the Don't Panic! Moderator"