2017 Investor Roundtable: TSLA Market Action

[DragonWatch]

Okay Wednesday, the day before Thanksgiving several posters suffered from dehydration and hoof-n-mouth posting. Ranging from hate Elon to excessive doubt in Elon’s projections. Typical Bear old dead meat when they could have had fresh baked/roasted turkey.

Tesla Meets Deadline for Giant Australian Powerpack Installation Won that bet? Bears hate it when a plan comes together

If you view the M3 launch like a loggerhead, like all loggerheads once the blockage is resolved, everything gets up and moving as planned.

Military operation plans are detailed plans on how we plan to go to war. Bottom line is that when the balloon goes up and we pulled out of the gate the op plans went out the window because reality is different than our best wild a$$ guess. Second bottom line, we are prepared to make necessary adjustments aimed at success.

Having actually worked for a living, Bears I am still here. NCOs used to proclaim they actually worked for a living as compared to officers, having been an NCO before becoming an officer, I would merely smile and walk forward

 

[Bet TSLA]

I sold the 315 calls averaging a hair under $1. Not worth the risk.... short term is a tough game! We get positive semi pricing news, positive Australia news and good macros and SP hardly does anything. Oh well, could be worse.

Good for you! I dithered and got out at $0.52. So lost $1900. Better than I expected but not what I'd hoped. I expect it will close today at $315 or so.

 

[Mkorpal]

I sold the 315 calls averaging a hair under $1. Not worth the risk.... short term is a tough game! We get positive semi pricing news, positive Australia news and good macros and SP hardly does anything. Oh well, could be worse.

It's obvious the market cares about only one thing. And it makes sense. Everything hinges on the ability to ramp up production of the model 3. Until we get hard numbers on increasing production rates, we are likely stuck here.

When it does happen though, I expect we will move fast back to the all time high and beyond.

 

[1kEE]

Good for you! I dithered and got out at $0.52. So lost $1900. Better than I expected but not what I'd hoped. I expect it will close today at $315 or so.

And then I started buying back in, so I may still end in the red...

The best play would have been to buy the dip after open. However, told myself that I would not increase exposure as I already had plenty of that.

 

[Bet TSLA]

And then I started buying back in, so I may still end in the red...

The best play would have been to buy the dip after open. However, told myself that I would not increase exposure as I already had plenty of that.

Well, I'm just playing around. I think TSLA will go up a bit on the news of South Australia completion and semi orders. Possibly they may reveal Roadster order numbers over the weekend, or say more about Model 3 ramp progress. In any case, I think the leg up that didn't happen today will happen Monday. So I'm in again on Dec 1 320 calls. No telling. May make a few bucks. The "market action" today is somewhat anemic as expected.

I pretty much never buy calls, just sell puts, so this is just playing around.

 

[1kEE]

I am terrible at the short term game and Tsla is very unpredictable at the moment.

However, I get tempted by certain situations (in this case, cheap 315 calls on Wed and today) and can't resist sometimes. I just got lucky twice in a row. Pure dumb luck. Now back to long term!

 

[MartinAustin]

Nice climb into the half-day close...

 

[myusername]

haha... omg. what a ridiculous show this stock is. $316. i mean, come on... couldn't they even try to be a little inconspicuous?... they clearly have no concern about the SEC.

well, I guess I should be thanking these guys for creating such an opportunity. hundreds of dollars of hype.

 

[1kEE]

haha... omg. what a ridiculous show this stock is. $316. i mean, come on... couldn't they even try to be a little inconspicuous?... they clearly have no concern about the SEC.

well, I guess I should be thanking these guys for creating such an opportunity. hundreds of dollars of hype.

What's wrong, your puts didn't do well today?

 

[Starno]

haha... omg. what a ridiculous show this stock is. $316. i mean, come on... couldn't they even try to be a little inconspicuous?... they clearly have no concern about the SEC.

well, I guess I should be thanking these guys for creating such an opportunity. hundreds of dollars of hype.

No 6 whatsoever so ....

 

[Waiting4M3]

I really dislike this line of thinking where there is barely any accountability on all the lofty ambitions and targets Tesla sets. At some point, you need to take stock and take into account current performance to evaluate the likelihood that future performance goals will be met. Isn't it weird to essentially avoid the question on current performance but still 'believe' that Tesla is on trajectory to meet a future price? Because current performance is exactly part of that trajectory. IF they are behind now, we need to additionally show where Tesla will speed up its planned trajectory in the future to catch up. For me, your analysis completely overlooks that question and therefore less and less usefull as Tesla continues to miss targets.

Current performance such as the margin on MX is exactly why I think that Tesla will hit the target price point, maybe not on Jan 1st 2019, but likely by Dec 31, 2019.

 

[pz1975]

No 6 whatsoever so ....

But 5 is only 1 from 6. It's obvious.

 

[MitchJi]

It seems to me your position only makes sense, if one dismisses the validity/evidence of this quote from nine months ago, which was embedded in the very same (April 1) message you seem to complaining about. In other words there IS evidence of cost reductions in 2017, 1. so it IS reasonable that further expected cost reductions by 2019 are realistic.

Missing a planed ramp for M3 module production says very little about the pace of the cells or even PowerPack and PowerWall production. Your position seems to be generalizing from one well contained step of the overall enterprise to the entire entity. That in my view is unreasonable. Besides, I expect most of the evidence you seek to be closely guarded business secrets.

1. I don't understand what you are talking about?! You must be referring to someone else's posts? I posted the following to support my belief that $75 per kWh is realistic!

Part of a long post I made on Tesla’s pack costs. If you want to see the supporting quotes you can use the link.

My calculated figures were:
I believe that when the GF production hits 35 GWh (2018 or 2019) Tesla's car pack costs will be less than half of $190 per kWh (~50%-55%) or under $95 per kWh. Probably under $85 per kWh

We have had many other discussions about vertical integration and co-location. I will pile on again and say that for GFs,
2. it is the co-location that is more relevant than vertical integration, though both are in play.

2. I've quoted Elon and JB agreeing that using custom large scale equipment has a bigger impact on reducing costs than colocation which is different than vertical integration.

 

[Reciprocity]

Agree that this might be a slight risk at the beginning. But lets look at some important factors here:
1. Solar Energy cost is constantly dropping
2. Battery cost is constantly dropping
3. At the current cost, given the promise of readily available Megachargers, who could buy anything else?

The third point is really to get as many trucks on the road because only then you can finance the buildout of such a network, Now imagine if Daimler or Volvo were to offer 5cents in 5 years: They would have to build the whole network financed (Billions of money I guess) by themselves whereas Teslas was financed by trucks sold and charging, even if it were at 0% Margin. So I don't think this is a big issue.

And they would have to but panels and batteries from Tesla.. Haha. Or at the very least from someone who has a markup.

I still think Tesla will find a way to use old packs from 10 year old Tesla's for the mega charging network. By the time these are being rolled out, there are going to be some packs coming in from 2010-2012 cars that just purchased the 100KWh drop in pack upgrade. Imagine a brand new power train at 10 years that is 2x better then what you had for the low low price of $20k with trade in of you old pack. Tesla would have a 50% gm on those upgrades and get a free 60-75KWh pack that is still 80%. Sucks for a car but awesome for stationary and another 10 years.

 

[Reciprocity]

1. I don't understand what you are talking about?! You must be referring to someone else's posts? I posted the following to support my belief that $75 per kWh is realistic!



2. I've quoted Elon and JB agreeing that using custom large scale equipment has a bigger impact on reducing costs than colocation which is different than vertical integration.

Sub $100 is guaranteed and parity with ICEv. $85.. for storage for sure, storage is cheaper because you are not constrained by space and you don't have to build a titanium casing around it to protect it. Don't forget, the improvements can happen at both the cell and pack level. For cars, this is meaningful because the pack and BMS are as important as the cells. I believe Tesla is squeezing margin from both of these and small refinements from each iteration add up to major improvements over years and decades.

What Tesla is trying to do with the gigafactories is tight vertical integration with suppliers and keep marginal costs down to some small percent over the cost of raw materials while securing raw materials and simplifying the supply chain by sourcing as many raw materials as close as possible. That and automation on a new level with alien dreadnaught like robots mounted in 3D and nothing so fast you need a strobe to see them.

If they can pull even half that stuff off, cost will come down and more importantly, the energy density, charge rates and durability will improve. Based on model 3 alone, I think parity with ICEv is all but here. Certainly they can't re-charge as fast, but most of us know that doesn't matter since we don't rely on that for daily charging. And I get that many model 3s will be folks living in apartments, but charging infrastructure will improve independently based on market penetration of EVs. Meaning, that's a problem that will solve itself over time and has nothing to do with battery tech. Electricity is already everywhere, it's not going to be difficult for apartment managers to add charging as demand increases. They will have to, to lure residents that demand charging. They can also charge a slight premium for rent to those who require charging.

Lastly, new battery tech will come, but it will need to compete on price as well as c-rate, density and safety. Tesla is hitting a sweet spot now and driving prices down. Newer tech must be much better to displace what Tesla will be producing in very large volumes. And who better to partner with if you have a new battery tech then the biggest customer for batteries on the planet?

 

[jackdillio]

I sold the 315 calls averaging a hair under $1. Not worth the risk.... short term is a tough game! We get positive semi pricing news, positive Australia news and good macros and SP hardly does anything. Oh well, could be worse.

option is hard to play. stupid time decay is the worst. even though you got the direction and targeted price correct you still don't make money if it doesnt go much higher.

 

[landis]

1. I don't understand what you are talking about?! You must be referring to someone else's posts? I posted the following to support my belief that $75 per kWh is realistic!

Sorry.
I was trying to agree with you, by attributing this statement to you, while continuing a response to the first quote, in this earlier message at2017 Investor Roundtable: TSLA Market Action

More apologies and follow up for the other quote in the message was moved to the general discussion thread...

2. I've quoted Elon and JB agreeing that using custom large scale equipment has a bigger impact on reducing costs than colocation which is different than vertical integration.

Yes, I had gone back and reread some of your earlier posts after this over simplified comment, and was hoping you wouldn't pay so close attention. ;-) I was trying to emphasize that co-location can be a good thing and not simply the same thing as vertical integration, or the antithesis of 'core competency' orthodoxy.

BTW, I find the notion of large scale equipment fascinating, as my career is with a mainframe company (one of the bunch) that had continued advocating scale up v.s. scale out. Computer clusters certainly blur these simplistic distinctions.

 

[traxila]

option is hard to play. stupid time decay is the worst. even though you got the direction and targeted price correct you still don't make money if it doesnt go much higher.

When you sell them the time decay is on your side.

 

[MitchJi]

Balanced?!

I don't know why would you mention this to schoneluch, who is one of the most balanced and valuable contributors here...

 

[Starno]

I actually agree to some extent with Jonas : stock will get up high and then get cut in half in 2018.
But not at the same degree :

I think the stock will likely reach 700-800, then get back to 400, and end the year around 500-600.
All of that from this thesis : there is A LOT of capital waiting on the sideline waiting to see how Tesla will execute on the ramp. It's likely that we will have multiple positive news next year, driving a lot of capital into the stock.
Then because of the sudden urge, a lot of people will still be cautious and will have some doubts, which will drive the stock back down and then get up again to a certain mean of 500-600.