TSLA Market Action: 2018 Investor Roundtable

[TrendTrader007]

That is dirty. I'd consider taking my business to another brokerage.

I agree but part of it is my fault for a single concentrated position with extremely high margin
even if MS had not forced my hand I could have lost big if the stock went down 10% AH instead of up
fortuitously, I ended up buying 300 calls just as the stock took off
I will be adding to my position on a pullback tomorrow but only way OTM calls

 

[TrendTrader007]

But why did you choose such a far away call? There is a massive premium to it. Wouldnt buying a more near term call and rolling over be cheaper?

I expect SP to be at least trading between $600 to $1000 by Jan 2020, conservatively
also realize that I just plunked in practically 50% of my entire net worth in a single call option! I need a little margin of safety

 

[anticitizen13.7]

The joke about always inversing WSB is applicable 9 times out of 10.

Those guys are gamblers, and sometimes you won and sometimes you lost. That's why I never trade anything that WSB is meming.

The hilarious thing about WSB is that most of the people there are ordinary guys like me, but they pretend to be the Wolf of Wall Street. Many seem to be trying to get rich quick on YOLO plays, which almost always fail. I think most people there would acknowledge that a lot of it is a joke, haha

 

[theschnell]

To change the subject from Einhorn to Eisman, this most recent bottom (yes I'm risking calling a bottom before earnings. I think all bad news is already priced in) will from now on be known as the Eisman bottom.

It is very, very similar to the Spiegel bottom at around $180 when the Model X was already ramping in late 2016 and the market was giving them no credit for it whatsoever.

Prepare for liftoff.

I was feeling bad today for this post I did last night because I was afraid people might take it to mean 'lift off" would be sudden and extreme, when really I meant strong and steady over the next several months. Looks like I had no reason to feel bad about anything...

 

[Causalien]

"Stock price finally reaches $400. That's when the short squeeze starts."
— I'd believe that. But do you have some more specific rationale for it?

Nah. Just experience. No hard numbers. Did a quick summary of when shorts started increasing their short around $360 and accounting for their margins. The temporary increase of 30% margin to 60% margin requirement from many members here should cause a mini squeeze. Eventually that'll get adjusted back to 30%, but I believe the brokers will have to adjust back to 60% margin again for the Q3 conference since that's definitely going to be a controversial ER.

If you want to see what a turnaround will do to a stock. You can check out AMD's stock price. The real rise begins only after EPS becomes positive even though the quarter before ER positive saw a significant rise in stock price as well.

 

[ZachShahan]

Please don't use question marks in headlines? I enjoy many of your articles? but purposefully refuse to read articles with a question mark in the headline as it just feels too clickbatey?

problem is, i like question marks when i have a question i'm posing. you know?

sorry if it comes across as clickbait. we have a lot of long discussions over there (maybe not like this thread, but hundreds of comments long) and i see many articles as the start of a discussion. a question is sometimes the most natural way to kick that off.

 

[FirebirdAlpha]

I'd be surprised if the short squeeze happens. I'm certainly not covering, though I will admit that the ER wasn't as bad as me and other shorts we're hoping for.

The problem is... It's still guidance.

They burned 740M cash last quarter. It's the 3rd quarter in a row with >$4/share losses. Accounts payable now dwarfs cash. And to top it all off, gross margin on the expensive Model 3 versions is still below 5%.

If they can't get that gross margin number up significantly, they're going to be in big, big trouble.

A reminder: shorts don't believe anything Elon says. We didn't believe the 5k/week. We didn't believe cross country road trip in 2017 (or 2018). And we certainly don't believe they can achieve 15% gross margin.

Overall, report feels like nothing new beyond "their cash position is very weak, but not crippling."

Q3 is still the make or break month. I think shorts will stick around until November.

 

[AlMc]

I am a cautious bull but I am elated with 2+ billion in cash and any positive GM on model 3 in Q2.

Do I think the SP does nothing but go up now...no, but I know very few bulls who believed the ER/CC would be this good.

 

[Cosmacelf]

i honestly felt like i was an idiot on the call — too many Qs and thoughts and too little time — but such is life.

Just tried to prioritize what I thought would have most impact and use in 2-3 min timeframe.

It’s way harder to sound with it on a real time call than people think it is! You did fine.

In the future, I’d like Elon to talk a a bit more about their technological superiority in: cell formulation, new model 3 motor, and other things like threir fuseless technology in M3.

I’d also like to know what they think of Porche’s 800v batteries and purported 350kW charging.

 

[Unpilot]

problem is, i like question marks when i have a question i'm posing. you know?

sorry if it comes across as clickbait. we have a lot of long discussions over there (maybe not like this thread, but hundreds of comments long) and i see many articles as the start of a discussion. a question is sometimes the most natural way to kick that off.

I would not worry about it. I think it is just because so many clickbait articles use that tactic.
Your stuff is usually pretty good.

 

[ZachShahan]

Stuff missing from the Q2 letter:

• July deliveries
• Model Y
• Semi
• Autopilot / Full-self driving
• Anything specific for solar roof (production targets, # produced, etc.)

Going by the graph, it seems July deliveries were around 13,000–14,000 (easy to calculate after looking up the other models on the graph) — unless I've accidentally made a grave error. That's a bit below what I expected, but maybe the # of cars in transit are similar this month as last.

 

[ZachShahan]

It’s way harder to sound with it on a real time call than people think it is! You did fine.

In the future, I’d like Elon to talk a a bit more about their technological superiority in: cell formulation, new model 3 motor, and other things like threir fuseless technology in M3.

I’d also like to know what they think of Porche’s 800v batteries and purported 350kW charging.

I should indeed save these questions in case I get invited on the next call as well. Good ones.

 

[brian45011]

8Q: Manufacturing efficiencies: Tesla versus others.

Answer: Hard to compare.

JB: most of the areas we struggled with, were areas we outsourced.So we've had to take them on and make them better.

Very rapid iteration between design and production is very helpful. Made a design change in battery models, will hit Q1, lighter, better, cheaper. [This is what they do in SpaceX, surprised it took them so long to do at Tesla].

Other auto manufacturers call it PPAP:

Production Part Approval Process (PPAP) is a standardized process in the automotive and aerospace industries that helps manufacturers and suppliers communicate and approve production designs and processes before, during, and after manufacture. Created in hopes to promote a clearer understanding of the requirements of manufacturers and suppliers, PPAP helps ensure that the processes used to manufacture parts can consistently reproduce the parts at stated production rates during routine production runs. For those in the automotive industry, the PPAP process is currently governed by the PPAP manual published by the Automotive Industry Action Group (AIAG).
​

In hindsight, skipping PPAP or some similar Tesla equivalent process appears to be one of the compromises made as part of the decision in May 2016 to accelerate volume production of the M3 by several years.

 

[ZachShahan]

I would not worry about it. I think it is just because so many clickbait articles use that tactic.
Your stuff is usually pretty good.

Thanks. We've gotten accused of clickbait a fair number of times, but we honestly try NOT to do clickbait. At the same time, you want to 1) get a point across in as few words as possible (and question marks can help to cut out words) and 2) stimulate people's interest enough to go beyond the title (always a tricky line, and if we were smart, we'd probably try to clickbait rather than try not to, but it just feels wrong).

 

[Zhelko Dimic]

This is a true story:
i have been margined 260% on $TSLA stock for several months now
out of the blue Morgan Stanley calls on my account at 10.30 AM CST today and advise me that they are raising my specific account margin requirement from 30 to 60 % effective immediately and their risk management department wants me to produce XXX in additional collateral effective immediately because they expect 30% drop in $TSLA stock after tonight's ER. i plead with them to allow me one more day before liquidating shares but they would not budge.
i therefore made the boldest trading decision of my life.
i liquidated all my $tsla stock and went all in $300 call January 2020 at 1.45 pm CST
rest is history

It doesn't compute. There were only 317 lots traded today, which is only around ~$2.3M, doesn't align with your previous statements. I mean all-in part doesn't align, rest could be true.
And of course you'll say that you traded only 3 lots, am I right?
That would be pattern I've seen, whenever you're challenged on any inconsistency...

 

[TrendTrader007]

$TSLA will be adding to way OTM LEAPS tomorrow happy to pay 50 to 100% premium cause this stock is just now getting started and tomorrow day# 1 of biggest short squeeze overall SP likely to easily double to $600 to $700 within next 6 months no price is too high to pay tomorrow

 

[neroden]

$4.22 per share loss

luvb2b predicted -4.38 -- he's bullish -- so they beat his projections. I'm super impressed actually.

 

[JRP3]

In the future, I’d like Elon to talk a a bit more about their technological superiority in: cell formulation, new model 3 motor, and other things like threir fuseless technology in M3.

I’d also like to know what they think of Porche’s 800v batteries and purported 350kW charging.

I doubt they'd tell us more than we already know about any of this.

 

[jhm]

I'd be surprised if the short squeeze happens. I'm certainly not covering, though I will admit that the ER wasn't as bad as me and other shorts we're hoping for.

The problem is... It's still guidance.

They burned 740M cash last quarter. It's the 3rd quarter in a row with >$4/share losses. Accounts payable now dwarfs cash. And to top it all off, gross margin on the expensive Model 3 versions is still below 5%.

If they can't get that gross margin number up significantly, they're going to be in big, big trouble.

A reminder: shorts don't believe anything Elon says. We didn't believe the 5k/week. We didn't believe cross country road trip in 2017 (or 2018). And we certainly don't believe they can achieve 15% gross margin.

Overall, report feels like nothing new beyond "their cash position is very weak, but not crippling."

Q3 is still the make or break month. I think shorts will stick around until November.

Thanks for your transparency. It's important to keep in mind that longs and shorts exist within different information bubbles. Specifically, this related to the credibility granted to Tesla management. Longs and shorts may hear the same words spoken by the same management, but shorts are inclined not to believe them. This also leaves shorts vulnerable to granting greater credibility to otherwise less credible sources than a company's management. Certainly if one finds management lacking in credibility, it is wise simply not to invest in that company. But we all must choose our own information bubble. In the long run, company performance will reveal which bubble was more adaptive. All the best.

 

[jhm]

$TSLA will be adding to way OTM LEAPS tomorrow happy to pay 50 to 100% premium cause this stock is just now getting started and tomorrow day# 1 of biggest short squeeze overall SP likely to easily double to $600 to $700 within next 6 months no price is too high to pay tomorrow

I disagree. Low $400s is more appropriate. Ambitions are clearly tempered. This is heads down, make more batteries time.