2017 Investor Roundtable: TSLA Market Action

[austinEV]

Sooo.... You don't think that Tesla is a cult stock, don't you?

I am probably "whooshing" on a joke here, but.

No. I mean in the scenario I am describing it "short squeezes" up to $1400 a share in 2017. That would be what you call in technical terms a *tad* overbought. I would happily sell, having more than enough for me and my family to retire in comfort. Then I would happily buy puts. Even if it "collapsed" to 500 or something you would still make a ton, especially since you would be starting with millions of casino money.

Caveats:
1) I don't think a squeeze would ever happen. It would be like 2013 with big long fat price support of a lengthy bull run.
2) I wouldn't enjoy a run to 1400 because I would bail at 450 and be furious with myself for selling early.
3) Puts may be a terrible play at $1400 since the premiums would be OUTRAGEOUS. I mean people would be selling $800 strike puts for $300. The market would price in a collapse making it tricky. Probably better to go to cash and be happy.

here is VW Squeeze. Who is holding through this?

edit: None of this is a reflection of my confidence in Tesla the company. But just like you could have been a long term believer in VW you still should have sold during the squeeze, even just to rebuy later and continue to hold forever, believing in VW.

Edit 2: According to my options calculator I would be up 1700% if it went to $1400 in the next few weeks. I am all aboard the Squeeze train.

 

[vgrinshpun]

I am probably "whooshing" on a joke here, but.
View attachment 253765

Check.

 

[Snapdragon III]

That would be awesome, please, please let TSLA do that. But, I would sell every share and buy puts. So would three quarters of the members here. They may have a 200B market cap in 15 years and that price will seem like a reasonable thing, but it would be too hasty for 2017. That's also the reason I don't think TSLA will ever squeeze. The holdings are too liquid. Only Elon's shares are really locked up. The institutions would sell some and the retail investors like me would bail fast. It's not that they wouldn't retake 200B at some point in the future, but its a clear trading opportunity.

I am not counting on an market cap of 200 billion in the next year, but I don't think it is impossible either. I disagree that all the retail investors like you would sell, and the stock would crash. I think a much more likely scenario would be that the stock would hit a market cap of 90 billon, and pull back to 75 billion, at which point many would sell to lock in their massive gains. Some would even even "buy puts" Then it would go shooting back up before they had a chance to get back in and they would feel like they missed it. It would continue to rocket higher, in a very volatile manor, shaking out longs as it went. The "smart" retail investors would be largely out because they "know" the stock has come way to far, to fast. Finally when the market cap is around 180 billion, after months of anguish over missing most of the move many of them would give up and jump back in giving the stock the final push to the market cap of 200 billion.

To say that you would do nothing until a market cap of 200billion is hit, then at that very moment, you would make the decision to sell everything, and short the company that just made you a fortune is a total fantasy. The only way this would work is if you woke up tomorrow morning and it had gapped up a couple hundred percent. NVDA is up 580% in the last 2 years, How many members of this board do you think have sold all of their shares and bought puts? I would bet some sold, and zero have shorted NVDA in any meaningful way. I am curious if you think NVDA is a "Clear trading opportunity" right now? Personally I missed it, and am afraid to buy it now, but I would never consider shorting it, and I think it's future is anything but "Clear".

For TSLA to get to a "Reasonable" market cap of 200B in 15 years would take compound growth of around 8.5%. I would bet that "three quarters of the members here" think Tesla will grow much faster than that over the next 15 years.

Edit: I see your caveat 2 in post above and I think it is right on. I think hitting 200 billion in market cap over the course of a year, is orders of magnitude more likely than over a couple days, and it makes figuring out what to do much harder. I would also have to be at least partially driven by some fundamental great news.

 

[austinEV]

I am not counting on an market cap of 200 billion in the next year, but I don't think it is impossible either. I disagree that all the retail investors like you would sell, and the stock would crash. I think a much more likely scenario would be that the stock would hit a market cap of 90 billon, and pull back to 75 billion, at which point many would sell to lock in their massive gains. Some would even even "buy puts" Then it would go shooting back up before they had a chance to get back in and they would feel like they missed it. It would continue to rocket higher, in a very volatile manor, shaking out longs as it went. The "smart" retail investors would be largely out because they "know" the stock has come way to far, to fast. Finally when the market cap is around 180 billion, after months of anguish over missing most of the move many of them would give up and jump back in giving the stock the final push to the market cap of 200 billion.

To say that you would do nothing until a market cap of 200billion is hit, then at that very moment, you would make the decision to sell everything, and short the company that just made you a fortune is a total fantasy. The only way this would work is if you woke up tomorrow morning and it had gapped up a couple hundred percent. NVDA is up 580% in the last 2 years, How many members of this board do you think have sold all of their shares and bought puts? I would bet some sold, and zero have shorted NVDA in any meaningful way. I am curious if you think NVDA is a "Clear trading opportunity" right now? Personally I missed it, and am afraid to buy it now, but I would never consider shorting it, and I think it's future is anything but "Clear".

For TSLA to get to a "Reasonable" market cap of 200B in 15 years would take compound growth of around 8.5%. I would bet that "three quarters of the members here" think Tesla will grow much faster than that over the next 15 years.

Yeah, you are describing a run to 200B which is a different beast and your description sounds good. I am addressing the "shoot up in 1 day" fantasy that makes the rounds. Squeeze and run are very different.

A "squeeze" I sell. A run I hope to have the discipline to hold. I am long Tesla because I believe it will grow in value dramatically over the next 5-10 years.

Edit: Man, putting "sell" and "TSLA" in the same sentence around here and the pitchforks come out.

I am super long TSLA. However I, from time to time, take on leverage, so I need to periodically dial back leverage for instance by going from calls to common stock. So in a "big run" scenario I would be converting short term calls to leaps and then leaps to common during a big run into the 400's. That is my version of "selling".

 

[Snapdragon III]

Yeah, you are describing a run to 200B which is a different beast and your description sounds good. I am addressing the "shoot up in 1 day" fantasy that makes the rounds. Squeeze and run are very different.

A "squeeze" I sell. A run I hope to have the discipline to hold. I am long Tesla because I believe it will grow in value dramatically over the next 5-10 years.

View attachment 253769

See edit to post above, but I agree. I do not think a several day squeeze to those heights is on the table.

 

[Starno]

I don't believe into a major squeeze until Tesla post huge profits, with huge margins, and a huge potential growth, surrounded by whacky competition.

 

[elasalle]

Back to reality will we hit 360 today ?

 

[austinEV]

I don't believe into a major squeeze until Tesla post huge profits, with huge margins, and a huge potential growth, surrounded by whacky competition.

Yeah this is it. If you want to have a squeeze fantasy all the things would have to line up:

1) Its Q3 2018 ER. Model 3 has hit terminal volume, and the factory is running at peak efficiency pushing out 100k+ S/X and 400k (?) M3 runrates.
2) The GF is humming. They are making so many batteries that they can pump out powerwalls and powerpacks to as many people as will buy them, at a decent margin.
3) Elon has taken a vacation from outrageous product planning and has not said anything in the last quarter that works out to "we need a massive capital raise" even though they will CERTAINLY do a massive capital raise soon.
4) Other positive stuff with solar and trucks/Model Y
5) The ER financials are spotless. They have great margins and huge top line revenue, bottom line profits (no Zev's required TYVM), huge sequential and QoQ growth rates. Its the PROFIT quarter.

and... add something else. Like they get a huge cost sharing deal to build a GF in china where they post 50% of the capital or something. Or they announce a battery breakthrough for a 20% volumetric density improvement. Some wildcard.

I think if you put every metric on the table and made them great and threw some last bullish thin on the Camel, you get your squeeze. But hell, even then I see it squeezing to $2000 and "collapsing" to $1100, to make up some numbers. So even holders wouldn't much care.

 

[mongo]

Yeah this is it. If you want to have a squeeze fantasy all the things would have to line up:

1) Its Q3 2018 ER. Model 3 has hit terminal volume, and the factory is running at peak efficiency pushing out 100k+ S/X and 400k (?) M3 runrates.
2) The GF is humming. They are making so many batteries that they can pump out powerwalls and powerpacks to as many people as will buy them, at a decent margin.
3) Elon has taken a vacation from outrageous product planning and has not said anything in the last quarter that works out to "we need a massive capital raise" even though they will CERTAINLY do a massive capital raise soon.
4) Other positive stuff with solar and trucks/Model Y
5) The ER financials are spotless. They have great margins and huge top line revenue, bottom line profits (no Zev's required TYVM), huge sequential and QoQ growth rates. Its the PROFIT quarter.

and... add something else. Like they get a huge cost sharing deal to build a GF in china where they post 50% of the capital or something. Or they announce a battery breakthrough for a 20% volumetric density improvement. Some wildcard.

I think if you put every metric on the table and made them great and threw some last bullish thin on the Camel, you get your squeeze. But hell, even then I see it squeezing to $2000 and "collapsing" to $1100, to make up some numbers. So even holders wouldn't much care.

And they get listed on NASDAQ which results in major purchases by index funds.

Edit: Correction S&P 500. (is it the weekend yet?)

 

[Mkorpal]

Am I the only one who face-palms anytime short squeeze comes up?

 

[Lessmog]

And they get listed on NASDAQ which results in major purchases by index funds.

Errm ... it is listed on NASDAQ. Probably meant some other listing?

 

[MP3Mike]

Errm ... it is listed on NASDAQ. Probably meant some other listing?

They probably were talking about if/when Tesla gets added to the S&P500.

 

[MitchJi]

I don't believe into a major squeeze until

1. Tesla post huge profits,
2. with huge margins,
3. a huge potential growth
4. surrounded by whacky competition.

I'm not buying the huge squeeze scenario. Didn't happen in the past, no reason to think it will happen in the future.

OTOH fast forward to the summer or fall of 2018 when Tesla is producing ten thousand M3 per week at a margin of at least 20% with more M3 production lines and the MY in the wings fulfills 1-3 on your list. As for competition there's no sign that any other OEM ever understands how to compete.

Which is why I don't understand how anyone could be foolish enough to believe that going all in on 2020 LEAPS with a strike price under $400 could be a mistake.

 

[austinEV]

...Which is why I don't understand how anyone could be foolish enough to believe that going all in on 2020 LEAPS with a strike price under $400 could be a mistake.

Trump risk. That is the concern for me.

 

[MitchJi]

Yeah this is it. If you want to have a squeeze fantasy all the things would have to line up:

1) Its Q3 2018 ER. Model 3 has hit terminal volume, and the factory is running at peak efficiency pushing out 100k+ S/X and 400k (?) M3 runrates.
2) The GF is humming. They are making so many batteries that they can pump out powerwalls and powerpacks to as many people as will buy them, at a decent margin.
3) Elon has taken a vacation from outrageous product planning and has not said anything in the last quarter that works out to "we need a massive capital raise" even though they will CERTAINLY do a massive capital raise soon.
4) Other positive stuff with solar and trucks/Model Y
5) The ER financials are spotless. They have great margins and huge top line revenue, bottom line profits (no Zev's required TYVM), huge sequential and QoQ growth rates. Its the PROFIT quarter.

1, 4 and 5 are coming by the end of 2018. The bold part of 2 would not be good and it's not going to happen. When the Gigafactory is humming Tesla will probably reduce their prices which will increase the demand. Even if they don't reduce their prices they won't be able to produce enough to satisfy demand. Porto Rico might not happen but if not it's not going to be very long before the cost benefit is going to be compelling enough that California or Hawaii or China or India will make a big push to move to 100% solar and wind plus batteries. How many Porto Rico's or similar do you think that they can provide for?

I don't believe that 3 on your list will be important forever. As long as they don't repeat something similar to the MX problems (and they won't) that will cease to be an issue.

 

[MitchJi]

Trump risk. That is the concern for me.

Me too, but I don't think that even trump can screw things up that badly unless you live in Korea, Yemen, Syria or....I just realized the size of that list .

 

[bdy0627]

I'm still holding a number of J18 $350s. Tesla is being awfully quiet about the Model 3 ramp and its release to the public. We are into mid October with no indication about the ramp yet. What happens to the stock short term if Tesla officially pushes back the public Model 3 release? I would guess we head back to the bottom of the range at least, $330ish. Anyone else worried about that? I would probably be smarter to just convert those 18s to 19s at this point and be done with it.

 

[Navin]

A squeeze could potentially happen today if there was a white swan event like tencent making an unsolicited offer to buy tesla and take it private for say 500 share. That would be epic and would literally cause many on seeking alpha to seek shelter.

 

[AlMc]

A squeeze could potentially happen today if there was a white swan event like tencent making an unsolicited offer to buy tesla and take it private for say 500 share. That would be epic and would literally cause many on seeking alpha to seek shelter.

Or insert Apple or Google for Tencent. Trump would try to block Tencent purchase

 

[bdy0627]

Since we are pretty close to max pain, perhaps the MM's will be guiding us to that level by close. We'll see.