2017 Investor Roundtable:General Discussion

[jesselivenomore]

@jesselivenomore, have read your ta posts. great work.

i agree this is a bull market, as bullish a tape as you could hope for. but one thing we're missing vs. 2013 is any stock that has had a vicious reaction to an earnings beat. most of these large stocks are moving <10-15% on even great earnings numbers. in 2013 nflx lit up that earnings season with a pretty awesome move in january and another in april just before tesla's numbers. seeing that reaction had to put fear in the heart of the shorts. there's no such comparable high flying report this time (not yet). tesla could be **the one** but i'd rather not make that as a solitary bet.

i guess the real question is: are you playing may 5-19 calls, and if so what strike at what price? and what's your target if the eps comes in where i think it does?

To clarify, I am not expecting exactly a 2013esque 1000% rally. The short interest then was substantially higher(50%?), and also the narrative then was going from "going bankrupt" to "profitable and viable". Even a massive earnings beat now would not present that kind of shock to the market. Currently, I feel there are much less people betting on "zero" outside the Spiegels of the world. The most prominent short thesis now is "overvalued", and that doesn't really change even with a profitable quarter.

My point was more that, in the current state of the market, the earnings will more likely be interpreted positively as opposed to with skepticism, so directionally higher. As for my own bets, I don't really do short term options unless it is for hedging, I have to be conservative because I trade "other people's money". Although over the last few months I've gone from equal weight invested to heavily invested to now leveraged invested with DITM 2018/2019 calls.

 

[Starno]

Shortsville, NY (14548) 10-Day Weather Forecast - The Weather Channel | Weather.com

Looks like chance of precipitation post May 3 is HIGH, with no let up in sight.

I also want to believe that, but everytime I have that kind of thinking I'm disappointed.
So I'll just play the wait and see card. With no expectation.

 

[luvb2b]

so we're basically on the same page.

i'm expecting a modest upside reaction, something less than 10-15%, maybe on the order of 3-7%. with that view it makes it hard to load the otm short term calls as i did 4 years ago.

To clarify, I am not expecting exactly a 2013esque 1000% rally. The short interest then was substantially higher(50%?), and also the narrative then was going from "going bankrupt" to "profitable and viable". Even a massive earnings beat now would not present that kind of shock to the market. Currently, I feel there are much less people betting on "zero" outside the Spiegels of the world. The most prominent short thesis now is "overvalued", and that doesn't really change even with a profitable quarter.

My point was more that, in the current state of the market, the earnings will more likely be interpreted positively as opposed to with skepticism, so directionally higher. As for my own bets, I don't really do short term options unless it is for hedging, I have to be conservative because I trade "other people's money". Although over the last few months I've gone from equal weight invested to heavily invested to now leveraged invested with DITM 2018/2019 calls.

 

[jesselivenomore]

so we're basically on the same page.

i'm expecting a modest upside reaction, something less than 10-15%, maybe on the order of 3-7%. with that view it makes it hard to load the otm short term calls as i did 4 years ago.

For sure less than 15%.

And for bull/bear market I meant for TSLA individually. In 2016 even though the broader markets was still bullish, TSLA was in its own bear market, where "good" news like Q3 was interpreted with high skepticism.

As for broader markets, on Thursday we will see if there will be any of those gap ups with AMZN, GOOGL, INTC, MSFT.

 

[hobbes]

And more good things coming:

Tesla will release ‘Automatic Emergency Braking’ feature on cars with Autopilot 2.0 hardware this week

Update: Tesla confirmed to Electrek that they are aiming to release the update by the end of the week.

 

[FredTMC]

Elon added Neuralink to his Companies on Twitter
How "boring"...

 

[esk8mw]

so we're basically on the same page.

i'm expecting a modest upside reaction, something less than 10-15%, maybe on the order of 3-7%. with that view it makes it hard to load the otm short term calls as i did 4 years ago.

Though we've had a solid runup which might even continue through May 3, I think a beat in the way you have described ($.50+ positive profit) would produce a massive reaction. Like 15%+.

The key here is managing expectations. In 16Q3, there was the leaked letter and consistent telegraphing of a strategy to stick it to shorts and create a profitable quarter. They did so, more or less in line with WS expectations, and the stock stayed flat. I expected an increase but the market shrugged.

Here, we have (i) WS expectations of a dollar or more loss, (ii) prior, consistent guidance indicating there's no way TSLA can be profitable before M3 launch, (iii) fears (however unfounded) of a fully integrated SCTY dragging down TSLA and accelerating losses, (iv) significant short interest, (v) all shorts are currently underwater because we are at an ATH, and (vi) bearish institutions aren't backing down a bit - downgrades and reiterations of $1xx PTs have been across the board lately. Big shorts like Einhorn are remaining short and this gives cover to our retail marks.

Bottom line, if we beat consensus earnings by $1.50 and the stock doesn't massively rally - regardless of what happens leading up to earnings - I'll be shocked.

 

[farzyness]

Though we've had a solid runup which might even continue through May 3, I think a beat in the way you have described ($.50+ positive profit) would produce a massive reaction. Like 15%+.

The key here is managing expectations. In 16Q3, there was the leaked letter and consistent telegraphing of a strategy to stick it to shorts and create a profitable quarter. They did so, more or less in line with WS expectations, and the stock stayed flat. I expected an increase but the market shrugged.

Here, we have (i) WS expectations of a dollar or more loss, (ii) prior, consistent guidance indicating there's no way TSLA can be profitable before M3 launch, (iii) fears (however unfounded) of a fully integrated SCTY dragging down TSLA and accelerating losses, (iv) significant short interest, (v) all shorts are currently underwater because we are at an ATH, and (vi) bearish institutions aren't backing down a bit - downgrades and reiterations of $1xx PTs have been across the board lately. Big shorts like Einhorn are remaining short and this gives cover to our retail marks.

Bottom line, if we beat consensus earnings by $1.50 and the stock doesn't massively rally - regardless of what happens leading up to earnings - I'll be shocked.

I agree with this analysis. It would be one thing with analysts were guiding for positive earnings and the stock wasn't near ATHs. The fact that it's in ATHs, short interest is high (25%+), we are getting ready to post a pretty large beat vs. analyst expectations, AND Elon is warning shorts... I don't know. I think it's realistic to hit the $400s post ER with some moderate pullback, and then retest those highs once Model 3 is launched. If ramp goes well then we go into $500+ territory and marching towards a $1tn market cap by 2025.

 

[Rarity]

Short interest 31,352,589 --> 31,584,047 on 4/13

Tesla, Inc. (TSLA) Short Interest

 

[aubreymcfato]

New issues with unions:
Some Tesla employees claim the company is illegally suppressing unionization efforts

Full Tesla statement:

Tesla is aware of the filing of unfair labor practice (ULP) allegations by the UAW and 3 employees at its Fremont facility (where over 10,000 people work). Each year, roughly 20,000 ULPs are filed with the NLRB and nearly two-thirds are dismissed after the investigation. Additionally, ULPs are often used by unions and their supporters as an organizing tactic. Tesla believes the ULP allegations are entirely without merit and will be responding as part of the NLRB process.
Tesla is a product and technology company, and like many other companies we ask our employees to sign a confidentiality agreement to protect our proprietary information. Our confidentiality agreement has nothing to do with the rights of workers to openly discuss organizing efforts – something that is obvious from the document itself and disproved by the fact that a small number of active Tesla employees are currently engaging in this very behavior without retaliation.​

 

[Mich]

View attachment 224399
China Xinhua News on Twitter

I think this is a very important sign. GF in China to be announced next week?

 

[andrewt3000]

Does anyone have an estimate of the size of the existing market for the model 3? i.e. number of $35k+ mid sized sedans sold in 2016?

What cars do you think it will compete with? (Mercedes C class, BMW 3 series, Audi A4, Lexus ES, Acura TLX, Cadillac ATS)
What about Honda Accord, Toyota Camry? How much does gas savings affect the affordability of the car?

 

[farzyness]

Does anyone have an estimate of the size of the existing market for the model 3? i.e. number of $35k+ mid sized sedans sold in 2016?

What cars do you think it will compete with? (Mercedes C class, BMW 3 series, Audi A4, Lexus ES, Acura TLX, Cadillac ATS)
What about Honda Accord, Toyota Camry? How much does gas savings affect the affordability of the car?

Yes.

 

[Reciprocity]

What about Honda Accord, Toyota Camry? How much does gas savings affect the affordability of the car?

I believe it can be competitive with those cars when you factor in TCO and 7+ years of ownership. We really need to have an idea of the residual value before we can be certain but if the residual values are as good for the 3 as they are for the S, I believe it could be very competitive on a 5 year TCO.

 

[farzyness]

I continue to be impressed by the number of folks that either a) have no idea what a "Teslehr' is b) know of Tesla but have never seen one in person c) know of Tesla and are convinced it's a failure (until proven otherwise).

There will be an exponential shift in groups a) and b) once Model 3 begins to ramp up late this year into next year. Tesla's (and Elon's) awareness factor will be reaching Bill Gates/Steve Jobs levels so incredibly quick, that most shorts won't be able to say OMGIMBANKRUPT before they are bankrupt.

Anyway - wanted to keep adding fuel to the fire.

 

[SW2Fiddler]

I continue to be impressed by the number of folks that either a) have no idea what a "Teslehr' is b) know of Tesla but have never seen one in person c) know of Tesla and are convinced it's a failure (until proven otherwise).

There will be an exponential shift in groups a) and b) once Model 3 begins to ramp up late this year into next year. Tesla's (and Elon's) awareness factor will be reaching Bill Gates/Steve Jobs levels so incredibly quick, that most shorts won't be able to say OMGIMBANKRUPT before they are bankrupt.

Anyway - wanted to keep adding fuel to the fire.

THIS is one big reason I always take Pearlie May to a Lexus dealership for her annual Safety Inspection. Exposure. Really high-quality conversations with Car People. Lots of "light bulbs over their head" moments, every time...

 

[TradingInvest]

Elon put it in writing, that he expects TSLA's price to reach $3000 in 5 to 10 years. Shorts think Elon is just making empty promise to hoax the employees.

We the long term holders know it's the contrary. He understands those employees may come to him in 10 years and ask where is the 10 fold? Elon would not make that prediction if he doesn't have the confidence and reasons.

 

[LoL Rick]

I continue to be impressed by the number of folks that either a) have no idea what a "Teslehr' is b) know of Tesla but have never seen one in person c) know of Tesla and are convinced it's a failure (until proven otherwise).

There will be an exponential shift in groups a) and b) once Model 3 begins to ramp up late this year into next year. Tesla's (and Elon's) awareness factor will be reaching Bill Gates/Steve Jobs levels so incredibly quick, that most shorts won't be able to say OMGIMBANKRUPT before they are bankrupt.

Anyway - wanted to keep adding fuel to the fire.

I have been displaying my car at car shows between 2 and 5 times a month for nearly 3 years. Mostly because I believe in the mission of the company, but partially because it's just plain fun. Even in a decent sized metropolitan area of Florida where Teslas are not exactly rare, the number of people who have no idea is simply staggering. So many hard core "car people" have walked up and asked "What is that?" Almost inevitably followed by "Who makes it." The awareness of Tesla, and by extension, the capability of BEVs is still ridiculously low. I'm doing my part to educate the public and encourage other Tesla owners to do the same.

Also in that vein, every time I'm in "pole position" at a red light, I take the opportunity to educate other drivers on the benefits of electric power. Even my lowly RWD 85 makes the point quite well.

 

[farzyness]

I have been displaying my car at car shows between 2 and 5 times a month for nearly 3 years. Mostly because I believe in the mission of the company, but partially because it's just plain fun. Even in a decent sized metropolitan area of Florida where Teslas are not exactly rare, the number of people who have no idea is simply staggering. So many hard core "car people" have walked up and asked "What is that?" Almost inevitably followed by "Who makes it." The awareness of Tesla, and by extension, the capability of BEVs is still ridiculously low. I'm doing my part to educate the public and encourage other Tesla owners to do the same.

Also in that vein, every time I'm in "pole position" at a red light, I take the opportunity to educate other drivers on the benefits of electric power. Even my lowly RWD 85 makes the point quite well.

You and I sound like the same person! We just took ours to our local Cars and Coffee and our cars definitely attracted a ton of attention. It was a blast showing them off. You are 100% right - the awareness is so low it's crazy (STILL!!!).

 

[RobStark]

What cars do you think it will compete with? (Mercedes C class, BMW 3 series, Audi A4, Lexus ES, Acura TLX, Cadillac ATS)
What about Honda Accord, Toyota Camry? How much does gas savings affect the affordability of the car?

Compact Entry Level RWD/AWD Luxury Sedans.
Mercedes Class
BMW 3 Series
Cadillac ATS
Lexus IS

Compact Entry Level FWD/AWD Luxury Sedans
Audi A4 (tarted up Jetta)
Acura ILX (tarted up Civic)

Midsize Entry Level Luxury FWD/AWD Sedans

Lexus ES(tarted up Camry)
Acura TLX (tarted up Accord)

Midsize Luxury RWD/AWD Sedans.
BMW 5 Series
Mercedes E Class
Cadillac CTS
Lexus GS


Compact Luxury sedans totaled 516k in 2016 in the USA.
Midsize Luxury sedans totaled 308k in the 2016 in the USA.
Mainstream Midsize sedans totaled 2.1M in 2016 in the USA.

Total Auto Market in the USA was 17.5M in 2016 in the USA.