ValueAnalyst
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Does anyone know which banks wrote the call options on Tesla? If those banks aren't hedged with long stock, they may be in big trouble.
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Investment banks are some of the major market makers for options. Generally, market makers try to hedge their exposure to be neutral to market movements.
If the stock moves quickly up or down it can be hard for them to stay neutral though.
I expect most call options to have been sold as covered calls or as part of a bigger portfolio.
TL;DR - they are hedged against swings within normal variance.
Tesla is confident it will get Model 3 production lines in time despite strike threats
Fred L dug in a little deeper and indicated they make a high speed production line(s) for the inverters for the model 3. EM has gotten personally involved
Fred L dug in a little deeper and indicated they make a high speed production line(s) for the inverters for the model 3. EM has gotten personally involved
thanks valueanalyst. how many years have you been at it?
sadly by the time the stock hits 2000 i will likely have departed to a faraway land.
sadly by the time the stock hits 2000 i will likely have departed to a faraway land.
ValueAnalyst
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I have a mesh of personal and professional ~15 years of experience in M&A/accounting/economics/investing etc.
ValueAnalyst
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I'm curious to see how this plays out. I can't think of a company that grew as fast as Tesla may in the next 36 months. If Tesla Energy kicks in soon to its "superexponential" growth-rate (look up the defn for that word), then Tesla has the potential to grow a CAGR of 100% for the next five years. Amazon had some impressive growth in the 90's, but it didn't get to Tesla's current market cap until 2010, and its growth rate has declined from 40% to 20% since 2010. Also, in 2010, Amazon's short interest was only 4% vs. Tesla's short interest (vs. functional float ex-Elon ex-long-term-institutionals) ~40-45%. Apple's short interest was also below 5% when its stock shot up in 2004-07 while getting ready to launch the iPhone.
In short, we are in uncharted waters, and I'm not sure if banks could have hedged against the upcoming short squeeze. Hedging has limitations and is costly. Also, stocks move linearly but options don't, so you can't easily hedge option exposure with stock (i.e. the covered call strategy you mentioned). This may be why Goldman reiterated this morning its inexplicable sell rating:
Goldman Sachs maintains Sell on Tesla Motors (NASDAQ: TSLA) price target of $187.00.
This is the third time they are reiterating their sell call in two months, which I have never seen before.
In addition, their stock tanked 5% the other day. I know some of it had to do with earnings, but I wonder if if they have exposure to TSLA calls, and someone knows about it.
It kinda makes sense when I lay it out like this, but there's also common sense telling me banks definitely know more about this stuff than I do, and they are probably fully hedged. Also, other banks declined along with Goldman as well, so maybe the recent decline is just an industry trend. This is all conspiracy theory stuff, so take it with a grain of salt. What do I know....
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But after the acquisition by Tesla, IG Metall made a push to unionize more Grohmann – now ‘Tesla Grohmann’ – employees and managed to reach its threshold to start a collective bargaining effort with Tesla.
I guess this doesn't count as making a push then? (I mean I at least read this with the undertone that they didn't do that before)
02.07.2016 - Grohmann… bald mit Tarifvertrag?
my odometer will flip over 25 by the time 3 launches. i have done ok but truly my biggest mistakes were not holding winners long enough. my next biggest mistakes have been due to overconfidence.
hmm... maybe that should be telling me something.
hmm... maybe that should be telling me something.
Flashing off the "surprising number" portion of the comment
I just returned to the Montgomery County, Maryland, USA area from Southwest Florida for a visit. I used to have to go to the Gude Drive, Rockville, Maryland, USA Service Center to "count Tesla's" and "window shop" 'do i want that color or that wheel style'
In One Week driving or parked, I have seen, with or without owners, 7-8 Tesla X, 10-12 Tesla S, driving or parked by owners, all different ones. It is a wealthy area, but "they are selling like hotcakes"
There are a "Surprising number of just Tesla's (To be fair, 3 of them were at the Electric Vehicle club meeting EVADC.org) but privately owned
DurandalAI
Member
I guess my question is, does the increased value from robotic assembly offset the increased cost of the glass roof?
I can tell you Toyota did it. My 2005 Scion Tc which cost like $16k new has an all glass roof. The roof is in two relatively small pieces of glass and then there is a conventional ceiling with the a retractable shade in the front and back.
Here are 2 pictures to give you an idea how they did it:
http://st.motortrend.com/uploads/si...2005_Scion_TC_07z-2005_Scion_TC-Roof_View.jpg
http://images.gtcarlot.com/pictures/39407796.jpg
Since this was the standard setup and it is a cheap car I 100% guarantee it was cheaper to do this and add the sunroof mechanisms than have a conventional steel roof. I presume it is similar in that it had something to do with robotic assembly. That being said I don't know the cost of the tints and treatments Tesla uses to keep the sun tolerable without a ceiling. Still, they save money as well by not installing a ceiling under the glass.
DurandalAI
Member
Very interesting. I'm hoping for my own selfish benefit that the M3 has a full metal roof option, as I'm very sun-averse at least when it comes to personal exposure. (My solar panels love the sun, though!) If the end price is the same or cheaper and the solar infrared and UV issues are solved, I'd be OK with it. In the end, if it saves on production costs, it's my wallet that I care about the most in this scenario, so the faster they can pump these cars out, the fatter my wallet will be!
Plus they will provide an easy exit if you are ever driving perhaps a tad too spiritedly and a deer appears.
what are the muppets (a.k.a. goldman) thinking here? their models include large minority interest contribution from solar city, averaged to about 275m per quarter. and they still are guiding negative eps for this quarter afaik and continually saying sell on a stock that has blasted 70% past their price target.
the market seems to be ignoring them this time though. once bitten twice shy.
the market seems to be ignoring them this time though. once bitten twice shy.
Not always - some require you to opt in. In this case, the remedy would likely be shutting off the AP software in exchange for $5,000 or less back. I would assume this would be a lawsuit where you opt since you would lose functionality. Even if you are right and it's an opt-out case, I think the vast majority of people would opt out due to lot wanting to lose AP functionality and/or loyalty to Tesla.
That's how I'm viewing it, yes. As usual, the biggest financial risk here is legal fees and that's just an unavoidable part of being a high profile corporation. You will attract a fair number of lawsuits.
the automated assembly access advantage is...
reversible for extraction
Not necessarily. Litigation has replaced breeding horses to race as the sport of kings. There are tangible and intangible expenses.
Voltaire: “I was never ruined but twice: once when I lost a lawsuit, and once when I won one.”
Tangible expenses include defense costs and damages paid/awarded (IIRC, the only recent publicity about damages paid has been: i) 'Lemon-law' lawyer declares victory against Tesla and ii) Tesla Settles Dispute With Model S P85D Owners In Norway - Offers $7,700 Or Upgrades) Can't remember about Borg Warner; Hoerbinger and other litigation resolutions are protected by NDAs.
Intangible costs include the potential reputational harm you mentioned, the diversion of key managerial and operational personnel to answering/objecting to time-consuming discovery, and the possible alteration of prior practices (future damage control). An example of the last could be how does this suit affect the recognition of previously deferred revenue for the system in controversy?
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Oh, come on. That last point is ridiculous. You really think unproven allegations from a private lawsuit (occurring 3 weeks after the end of quarter no less) will affect how they run accounting when they report in 2 weeks? Not a chance. That treatment was figured out months ago, validated and signed off by Tesla's independent auditor a while ago. A frivolous lawsuit isn't going to change that analysis.
It's also worth mentioning that fixing alleged defects is not admissible as evidence. e.g., if someone sues Tesla claiming its roof design is defective and unsafe and while the lawsuit is pending Tesla reinforces the roof, plaintiff cannot bring up the fact that Tesla beefed up its roof after the suit was filed as evidence that the roof was previously defective. Tesla's behavior will not be modified by a highly questionable lawsuit unless the judge forces them to alter behavior.
Nope, the 1Q17 financials have been closed for awhile. While independent auditors may consult on quarterly filings, they only "sign off" with a written opinion for the annual report. Whether PWC's on-site staff even looked at Tesla's AP2 revenue recognition for 1Q17 is unknowable
While there are numerous exceptions and devices skilled litigators use in the application of the Rules of Evidence, admissibility was not the point about intangible expenses related to modification of future practices/behaviors. Prudent corporations/entities adapt when new information becomes known, regardless of judicial rulings.
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