TSLA Market Action: 2018 Investor Roundtable

[Starno]

?


From TeslaCharts on Twitter

 

[RobStark]

To all those claiming California regulations, like the solar energy mandate, are driving businesses and people out of the State......

California's economy now globe's 5th largest | CALmatters

 

[phil0909]

I would expect builders to work with solar installers just like HVAC, electrical, etc...

So, basically re-selling the services of local tradesmen to wholesale buyers? What's the margin on that? 1%? 2% if you're really good? Are there any large national or even statewide HVAC or electrician companies making good profits from homebuilders?

I'm just not seeing how Solar City capitalizes in any significant way.

 

[ValueAnalyst]

My understanding is that there is no limit to the number of times the share can be lent out -- so technically you can have more than 100% short interest.

For reasons I don't fully understand, Ihor Dusaniwsky thinks the practical limit in Tesla's case is about 47 millions shares available to short on a sustained basis, and we were at 40.5 million on Friday (and probably higher now if I were to guess).

"If short selling demand continues to grow at this pace, short sellers will feel the angst that Tesla Model 3 buyers are feeling – with demand outstripping supply. Not all long shares are in stock lending programs and we estimate that the total amount of stable lendable Tesla stock is approximately 47 million shares, of which 40.5 million have already been taken down. That leaves approximately 6.5 million shares left to short which may decrease if long shareholders in lending programs begin selling their shares." https://www.s3partners.net/Research/TSLA13.php
​

If Ihor is right, shorts are starting to run out of room to manipulate the SP. If buyers keep buying and pushing the SP up, it could get interesting.

Edit: @jelloslug was faster.

I don't think there is a limit to how many times a share can be lent out.

I thought about this possibility too, and then decided that the risk of a domino effect in a short squeeze would be too large for many brokers to accept.

Theoretically, imagine if one share was used to create two or more short positions, and then the original long decided to sell. That would mean closing three or more positions nearly simultaneously, if other shares could not be located. Furthermore, if this was possible, then why would the term short squeeze even exist, since one share could be used to create unlimited short positions?

Practically, I’m not sure if there are many stocks with close to 100% short interest, let alone more than 100%. For the few companies for which that is the case, I would guess that there are special circumstances (around classes of stock or other) that make the metric not meaningful.

 

[Waiting4M3]

?


From TeslaCharts on Twitter

Not sure what the 11.7% is. Everything else are just what the 10-Q shows:

auto sales without resale value guarantee 2,182,514
auto sales with resale value guarantee 299,038
auto regulatory credits 80,329
auto leasing 173,436
====================
total auto sales 2,735,317, gross profit 539,424, gross margin 19.7%, (same as Q1 letter)

Then add in the 263,412 services revenue, you get total auto revenue 2,998,729, gross profit 421,867, gross margin 14.1% (service margin is negative).

I have no idea why TeslaCharts put 11.7% next to 80,329. It sure looks ominous though

 

[mongo]

I thought about this possibility too, and then decided that the risk of a domino effect in a short squeeze would be too large for many brokers to accept.

Theoretically, imagine if one share was used to create two or more short positions, and then the original long decided to sell. That would mean closing three or more positions nearly simultaneously, if other shares could not be located. Furthermore, if this was possible, then why would the term short squeeze even exist, since one share could be used to create unlimited short positions?

Practically, I’m not sure if there are many stocks with close to 100% short interest, let alone more than 100%. For the few companies for which that is the case, I would guess that there are special circumstances (around classes of stock or other) that make the metric not meaningful.

My thoughts:

The broker deals with a pool of shares, so there is no domino effect unless the shares sold is greater than the non-shorted shares at the broker. Similar to a bank having cash on hand, but not the cash you specifically deposited.

i.e. 500k shares on the books, 200k lent out, there is no need to recall shares until 300k shares are sold (ignoring minimum liquidity) since they can provide shares from the pool back to owners.

In a short squeeze, a margin called shorter has to return shares, so they have to buy from somewhere. They are already on a margin call, so they cannot borrow the share to return to someone else. In the multi-sale case, multiple shorts are trying to cover simultaneously from the pool of sell orders, but the chain of original transaction is not important.

 

[SteveG3]

[snip]

Given slightly different parameters, the SP could have easily gone past 400 last year and TT007 would have been called a "visionary". Easy to criticise in hindsight.

I like the guy, and $400 last year was surely possible, so not a concern to post about. My concern was more about the impact of posts that were made asserting that TA indicates prices like $2,500 to $3,000 in early 2019 were a near sure thing. That was questioned in foresight on this thread (though such questioning was not given much consideration).

 

[Skryll]

I like the guy, and $400 last year was surely possible, so not a concern to post about. My concern was more about the impact of posts that were made asserting that TA indicates prices like $2,500 to $3,000 in early 2019 were a near sure thing. That was questioned in foresight on this thread (though such questioning was not given much consideration).

Well, if all had gone as planned in 2017, to get thousands of model 3 into the hands of people all over the united states, then the thanksgiving or christmas would have been the iphone moment that we will observe thanksgiving 2018, and the $10b short back then would have had to cover already. Not sure about the $2500 by 2019, but above $600 would have been certain at that point. So its all a bit delayed but eventually the full impact of energy storage + generation + transportation + logistics + ai play had to give them a massive liftoff.

 

[EinSV]

I thought about this possibility too, and then decided that the risk of a domino effect in a short squeeze would be too large for many brokers to accept.

Theoretically, imagine if one share was used to create two or more short positions, and then the original long decided to sell. That would mean closing three or more positions nearly simultaneously, if other shares could not be located. Furthermore, if this was possible, then why would the term short squeeze even exist, since one share could be used to create unlimited short positions?

Practically, I’m not sure if there are many stocks with close to 100% short interest, let alone more than 100%. For the few companies for which that is the case, I would guess that there are special circumstances (around classes of stock or other) that make the metric not meaningful.

As you probably know, Ihor said in a tweet (below) that there is no legal limit on the number of times a share can be lent but as you suggest there may be practical limits.

Either way, Ihor seems to know his business and per my earlier post he says shorts are getting close to the practical limit of shares to short, which is good enough for me.

Ihor Dusaniwsky‏ @ihors3
Ihor Dusaniwsky Retweeted Groggy T. Bear

It's not against regs for the same shares to be rehypothicated for margin reasons and relent multiple times. The process in effect creates shares and can cause short interest to be larger than the float. Ihor Dusaniwsky on Twitter​

 

[ValueAnalyst]

As you probably know, Ihor said in a tweet (below) that there is no legal limit on the number of times a share can be lent but as you suggest there may be practical limits.

Either way, Ihor seems to know his business and per my earlier post he says shorts are getting close to the practical limit of shares to short, which is good enough for me.

Ihor Dusaniwsky‏ @ihors3
Ihor Dusaniwsky Retweeted Groggy T. Bear

It's not against regs for the same shares to be rehypothicated for margin reasons and relent multiple times. The process in effect creates shares and can cause short interest to be larger than the float. Ihor Dusaniwsky on Twitter​

Thanks; I was not aware of his position. I followed up with him to dig into this further: ValueAnalyst on Twitter

 

[SteveG3]

Regarding the comment "All flash, no substance", I can never understand how they can call someone who is a self-made billionaire, who has built 3 transformational companies (Paypal, Tesla, SpaceX), no substance. If that is not substance, I don't know what is. There is no amount of flash to overshadow that amount of substance, imo.

One of the basic no substance/all flash falsehoods in life is to virulently insist that the person reasonably presenting facts that you do not want heard is a no substance/all flash con man. The higher intensity of the false accusations can impact on lookers on an emotional level.

Having the mega phone of the mass media to scream your message and attempt to distort any response from the person speaking facts can take you as far as convincing millions that a self-made billionaire working 90-100 hours a week is a carnival barker conning thousands of rocket scientists to do his bidding (well, have to admit, rocket scientists, have to be the easiest con artist "mark" out there- uh, oh wait...)

 

[ggr]

I just received a terms-and-conditions email from The Boring Company regarding purchase of Not-a-Flamethrower. It corresponds to a slight rise in TSLA. I wonder why it's correlated?

 

[madodel]

I just received a terms-and-conditions email from The Boring Company regarding purchase of Not-a-Flamethrower. It corresponds to a slight rise in TSLA. I wonder why it's correlated?

Could signal that when we receive our Not-a-Flamethowers that there may be some significant heat involved for certain unhappy to be folks.

 

[Causalien]

What exactly is Solar City's value proposition here? Selling installation services to homebuilders? Selling panels/tiles to homebuilders? Both?

I'd expect builders to do their own installations and purchase the very cheapest panels direct from Chinese manufacturers to comply with the new law at the lowest possible cost. Not seeing how Solar City profits from this, but perhaps I'm missing something?

I recognize it by experience a macro change.

So macro act as a slow push to stocks of related corps. Like interest rate raise all rate related products slowly.

In this case, it gives scty volume to achieve higher gross margin. Looks like musk was trying to shrink the solar installation business before and have made efforts to reduce its complicated financial products

Like any market, there will always be ppl that choose cheap solar and cheap installation, but there will always be that high end segment who choose scty tiles. Or want scty for that power wall integration. The only luxury ones i know right now is the scty tile. We'll know for sure when another player enters the luxury end of solar.

 

[Lhan]

I just received a terms-and-conditions email from The Boring Company regarding purchase of Not-a-Flamethrower. It corresponds to a slight rise in TSLA. I wonder why it's correlated?

Anything in the terms about short burning ?

 

[CuriousSunbird]

Not sure what the 11.7% is. Everything else are just what the 10-Q shows:

auto sales without resale value guarantee 2,182,514
auto sales with resale value guarantee 299,038
auto regulatory credits 80,329
auto leasing 173,436
====================
total auto sales 2,735,317, gross profit 539,424, gross margin 19.7%, (same as Q1 letter)

Then add in the 263,412 services revenue, you get total auto revenue 2,998,729, gross profit 421,867, gross margin 14.1% (service margin is negative).

I have no idea why TeslaCharts put 11.7% next to 80,329. It sure looks ominous though

Just to show what the margin would be without subsidies (also shows the vulnerability to falling value of ZEV credits).

 

[Causalien]

Well, if all had gone as planned in 2017, to get thousands of model 3 into the hands of people all over the united states, then the thanksgiving or christmas would have been the iphone moment that we will observe thanksgiving 2018, and the $10b short back then would have had to cover already. Not sure about the $2500 by 2019, but above $600 would have been certain at that point. So its all a bit delayed but eventually the full impact of energy storage + generation + transportation + logistics + ai play had to give them a massive liftoff.

Lol. I think most of us old timers have experienced tesla's time distortion field and have learnt better.

In the early days, One of my option position was up 20x at one point but ended up expiring worthless within 2 months because I bought the expiry based on projected elon time line. Now I am smarter and always add a year to each model.

So roadster 2020 will be delayed by 3 years as there are model Y and the semi before it and the roadster's own delay.

 

[CuriousSunbird]

Did we already discuss this:

the Mountain View Fire Department shared a report with other fire departments about the aftermath of the fatal Tesla Model X accident in Mountain View that is now also under NTSB investigation.

In the report (via KTVU), the fire department said that they monitored the battery pack and it reignited days after the March 23 accident, with Mountain View Fire Chief Juan Diaz commenting:

“In this particular case, six days later, the temperature inside those cells increased to the point of ignition. That’s why the car reignited. You have stored energy that is frankly unstable.”

 

[madodel]

Anything in the terms about short burning ?

Not-a-Flamethrower Terms and Conditions

* Required
I will not use this in a house
I will not point this at my spouse
I will not use this in an unsafe way
The best use is crème brulee…
...and that exhausts our rhyming ability.

Not-a-Flamethrower Terms and Conditions

* Required
I understand The Boring Company isn’t responsible for anything I do, no matter how genius or stupid. This includes: *





Harming others




Setting things on fire




Burning things to the ground




Smoking near the not-a-flamethrower




Putting anything flammable near the not-a-flamethrower




Showing off to my friends or romantic interests

 

[Esme Es Mejor]

Just to show what the margin would be without subsidies (also shows the vulnerability to falling value of ZEV credits).

And when they show the margin ICE automakers would have without oil & gas subsidies, that will be a meaningful & useful comparison.