TSLA Market Action: 2018 Investor Roundtable

[The Blue Owl]

I am so new to trading I don't know what this means while SP drops below 304$... Yesterday I was up 1800, now I'm up 1000. Sell, collect the 1000. Wait, get to 2k again tomorrow or drift below 1000. Options are stressful

I hope you don't take this the wrong way, but you are nowhere near ready for options trading (I'm really trying to help you by telling you this). You should read about what options really are, why they exist (i.e., what function they perform in the market), and most importantly how they are priced. Read about the Black-Scholes equation at least at a high-level and try to understand the big ideas. You don't need to go into the actual equation, but you should understand its inputs, what real-life elements they are modelling, and how those inputs impact the option price when their values change.

This time you got lucky. Take your profits and also a (long) break from option trading. Once you've built enough understanding that you can answer the basic questions for yourself, you can take the next step.

Trust me on this one.

 

[bdy0627]

I am so new to trading I don't know what this means while SP drops below 304$... Yesterday I was up 1800, now I'm up 1000. Sell, collect the 1000. Wait, get to 2k again tomorrow or drift below 1000. Options are stressful

If you think it's stressful when you are way up wondering when to sell, just wait til you are way down, figuring out what to do. Now that's really stressful.

 

[emir-t]

I hope you don't take this the wrong way, but you are nowhere near ready for options trading (I'm really trying to help you by telling you this). You should read about what options really are, why they exist (i.e., what function they perform in the market), and most importantly how they are priced. Read about the Black-Scholes equation at least at a high-level and try to understand the big ideas. You don't need to go into the actual equation, but you should understand its inputs, what real-life elements they are modelling, and how those inputs impact the option price when their values change.

This time you got lucky. Take your profits and also a (long) break from option trading. Once you've built enough understanding that you can answer the basic questions for yourself, you can take the next step.

Trust me on this one.

I am not taking it the wrong way and I appreciate the effort. Thank you.

 

[Zaxxon]

By end of 2018, Tesla will be 1st, 2nd and 3rd for USA EVs.
Wow! Absolutely incredible. Way to go Tesla!

View attachment 340118

They're already #1/2/3. The Prius Prime is not an EV; it's a hybrid.

 

[lklundin]

More like: Chinese Tesla buyers are getting slammed by tariffs and purchasing cars at a 60% premium. Tesla accelerating new plant construction to reduce cost to buyers.

The limited impact that the tariffs have on Tesla's Chinese sales was exactly the lesson the other day from our esteemed contributor @Fact Checking, let me boldly see if I can get it right:

With no comparable BEVs (incl. HEPA filter for that smog) Tesla effectively has a monopoly and since they are production constrained, all their product will still sell after an increase in price.

(As a Tesla investor I find that great. As a European reservation holder less so, I am feeling a little apprehensive regarding Model 3's EU pricing...).

 

[FirebirdAlpha]

On the short side, the deliveries report is very uplifting due to...

• No mention of profitability or cash flows
• No Q4 production or financial guidance
• No mention of the reservation list

If Tesla isn't profitable or cash flow positive in Q3, it's over.

Which is why Elon's email on Saturday was so interesting:

We are very close to achieving profitability and proving the naysayers wrong, but, to be certain, we must execute really well tomorrow (Sunday)

"Close" isn't going to cut it anymore here, especially because "close" on profitability implies a miss on cash flow positive. Considering the -2.6B working capital hole and the additional 1.2B in committed CapEx, Tesla doesn't have the wiggle room to be "close" anymore.

I suspect they aren't giving guidance because chapter 11 bankruptcy is imminent.

 

[tivoboy]

Did anyone catch Ron Baron on CNBC this morning saying they wouldn’t make the SR version for a year?

 

[Motor Mouth]

On the short side, the deliveries report is very uplifting due to...

• No mention of profitability or cash flows
• No Q4 production or financial guidance
• No mention of the reservation list

If Tesla isn't profitable or cash flow positive in Q3, it's over.

Which is why Elon's email on Saturday was so interesting:

We are very close to achieving profitability and proving the naysayers wrong, but, to be certain, we must execute really well tomorrow (Sunday)

"Close" isn't going to cut it anymore here, especially because "close" on profitability implies a miss on cash flow positive. Considering the -2.6B working capital hole and the additional 1.2B in committed CapEx, Tesla doesn't have the wiggle room to be "close" anymore.

I suspect they aren't giving guidance because chapter 11 bankruptcy is imminent.

We Shall See.

 

[Fact Checking]

• No mention of profitability or cash flows

• No Q4 production or financial guidance

It's a delivery report, not a quarterly financials report - Tesla historically has not guided financials in the delivery reports, the ones earlier in 2018 were exceptions to reassure investors and guide expectations during the fastest phase of the ramp-up.

No such information needed for the record Q3 deliveries and production results, which are speaking for themselves.

As to how high your losses are going to be if you bet against the Q3 and Q4 results: you've got to wait 3 more weeks until the Q3 quarterly report, no special treatment for shorts.

 

[RobStark]

Updated with BMW's actual numbers. No change to the overall point, other than to now confirm that even if one adds in Mini, Tesla is now outselling BMW/Mini in total in the US.

View attachment 340110

BMW says new 3 series will be 'game-changer'

Regarding tanking 3 Series sales BMW debuted a new 3 Series at the Paris Motor Show. Many 3 Series intenders may be holding back for new version.

Wery Wery interesting to see new "game changer 3 Series" sales vs Model 3.

 

[Leo9]

On the short side, the deliveries report is very uplifting due to...

• No mention of profitability or cash flows
• No Q4 production or financial guidance
• No mention of the reservation list

If Tesla isn't profitable or cash flow positive in Q3, it's over.

Which is why Elon's email on Saturday was so interesting:

We are very close to achieving profitability and proving the naysayers wrong, but, to be certain, we must execute really well tomorrow (Sunday)

"Close" isn't going to cut it anymore here, especially because "close" on profitability implies a miss on cash flow positive. Considering the -2.6B working capital hole and the additional 1.2B in committed CapEx, Tesla doesn't have the wiggle room to be "close" anymore.

I suspect they aren't giving guidance because chapter 11 bankruptcy is imminent.

Chapter 11 was announced yesterday. You're late.

 

[Bet TSLA]

On the short side...

I think you mean "on the short of brains side".

 

[sub]

I am so new to trading I don't know what this means while SP drops below 304$... Yesterday I was up 1800, now I'm up 1000. Sell, collect the 1000. Wait, get to 2k again tomorrow or drift below 1000. Options are stressful

This is legging into a bull call spread. I think you said you paid $850 for your call, at the time of my response you could have sold the ATM call (305) for ~650. I can’t remmeber what your strike price was however, if it was for example 295 and Tesla went up to 310, you would pocket the difference in strikes minus your premium but adding back what you paid for the sold call (~650).

I don’t know your exact situation (strike/premium) so I can’t say for sure I would make this play.

I was throwing this out because you said you were new, giving you something to think about. A simple delayed entry bull call spread example would be buying the 300 call for $500, waiting for stock to go up until you can sell the 305 call for $500. You now have a risk free spread with max profit of $500.

 

[RobStark]

Did anyone catch Ron Baron on CNBC this morning saying they wouldn’t make the SR version for a year?

Maybe he meant base $35k version?

 

[TradingInvest]

I am so new to trading I don't know what this means while SP drops below 304$... Yesterday I was up 1800, now I'm up 1000. Sell, collect the 1000. Wait, get to 2k again tomorrow or drift below 1000. Options are stressful

If you want to play option trading, you better pick a sector ETF or a stock that's more predictable. Tesla is heavily manipulated, probably by some shorts teamed with corrupted media. The manipulation makes it very difficult to predict short term. Why do you have to trade Tesla Option? Also, Tesla's short term option premium is very high before each major events. Buying those options usually get hurt.

Choose a strategy that makes sense, then practice and get good at it.

 

[RFernatt]

Chapter 11 was announced yesterday. You're late.

Tsk, tsk. Chapter 11 is for mere mortals. Tesla is going for Chapter 14.5 Bankwuptcy!

 

[shrspeedblade]

They're already #1/2/3. The Prius Prime is not an EV; it's a hybrid.

And one that still emphasizes the ICE powertrain, at least the Volt (which I owned) and the Clarity (which my Father in law owns) have a range over 50 miles.

Did anyone catch Ron Baron on CNBC this morning saying they wouldn’t make the SR version for a year?

If they keep getting so many AWD and Performance orders, I can easily believe this! (Although trickling out some SRs in the next 6 months would be good for marketing/publicity.)

 

[andrewt3000]

On the short side, the deliveries report is very uplifting due to...

• No mention of profitability or cash flows
• No Q4 production or financial guidance
• No mention of the reservation list

.

This is ridiculous and doesn't really warrant any response.... I'm pretty sure they don't give financial guidance in these... and they rarely give out reservation numbers because they have been down selling the model 3... presumably till now. Anyone that thinks demand / reservations is a problem... is a fool.

If Tesla isn't profitable or cash flow positive in Q3, it's over.

Which is why Elon's email on Saturday was so interesting:

We are very close to achieving profitability and proving the naysayers wrong, but, to be certain, we must execute really well tomorrow (Sunday)

"Close" isn't going to cut it anymore here, especially because "close" on profitability implies a miss on cash flow positive. Considering the -2.6B working capital hole and the additional 1.2B in committed CapEx, Tesla doesn't have the wiggle room to be "close" anymore.

I suspect they aren't giving guidance because chapter 11 bankruptcy is imminent.

What is -2.6B working capital hole??? Tesla has $2.7B in cash. They have do debt coming due... and I agree the markets are not good for more debt or raising equity... but as long as they are close to break even.. they should be fine for Q3. imho.

Tesla's Upcoming Debt Obligations (12 Months)

Type Maturity Size Conv. Price
Convert (SC) 11/2018 $230M $560.6
Convert (TM) 3/2019 $920M $359.8

Type Maturity Size
Prom. Note (SC) 8/2018 $100M
Term Loan (SC) 12/2018 $157M

I doubt the $230M will convert in november.... the big deadline looks like march 2019??? right?

 

[EVNow]

BMW says new 3 series will be 'game-changer'

Regarding tanking 3 Series sales BMW debuted a new 3 Series at the Paris Motor Show. Many 3 Series intenders may be holding back for new version.

Wery Wery interesting to see new "game changer 3 Series" sales vs Model 3.

Wonder where they got the idea for this ?

Drivers use their smartphone instead to unlock the vehicle and start it, by placing the phone in a wireless charging tray.

This sounds interesting. Does 3 AP get you out of tight parking spaces ?

The car will also be able to auto-reverse as far as 50 meters, helpful in confined spaces, by backtracking its exact path after recording steering movements.

 

[FirebirdAlpha]

This is ridiculous and doesn't really warrant any response.... I'm pretty sure they don't give financial guidance in these... and they rarely give out reservation numbers because they have been down selling the model 3... presumably till now.

This is incorrect. This is the first delivery report in a while that does not mention financial guidance or the reservation list.

Q2 Deliveries Report:

We also reaffirm our guidance for positive GAAP net income and cash flow in Q3 and Q4

The remaining net Model 3 reservations count at the end of Q2 still stood at roughly 420,000
​

Q1 Deliveries Report:

Net Model 3 reservations remained stable through Q1.

laying the groundwork for Q3 to have the long-sought ideal combination of high volume, good gross margin and strong positive operating cash flow.​

What is -2.6B working capital hole??? Tesla has $2.7B in cash.

Net working capital is at negative 2.6 billion.

They had 2.2B in cash at the start of the quarter. However, Accounts Payable - Accounts Receivable was -2.5B. All of these are included in net working capital.

Another way to look at it:

2.2B in cash
- 3B accounts payable
+ 500M accounts recievable
- 300M due in November
- 500M minimum cash balance
- 900M due in March
- 1.2B in committed CapEx
= 3.2B cash needed before Jan 1st

I doubt the $230M will convert in november.... the big deadline looks like march 2019??? right?

They need 1.4B in unrestricted cash in the bank on January 1st in order to be in compliance with their ABL agreement (900M March debt + 500M minimum cash balance)