I am so torn as I am sure many others are. I have a significant amount of sept calls that are strike prices between 115-125. I recently sold 5 of them because I had bought on margin and was tired of seeing my account value show up as negative. I know the safe thing would be to take more profit on the calls I have remaining but with the recent price increase's and current production rate I feel like this quarter might cause as much of a burst into ATH as last quarter did. I was not holding enough calls then(who was) and don't want to overcompensate this time.
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I think the new design options and price increases are a really good sign that demand is strong. I think it is also a really strong sign that they will reach 25% gross margins by year end. It might be too premature for Q2 release, but with these new price increases and options does anyone think it might be possible to see an upward revision of gross margin target in the future?
I mentioned this in the Design Studio Updates thread, but I would love to see Tesla release more exclusive options for the performance plus to up the top tier model above $150k. I've driven a Bentley Continental GT and this car is better in performance and as fun to drive, Tesla could capture that car class market if they have options (exclusive colors and aggressive body designs) so the ultra rich can show off their exclusive and expensive MS. This top tier model would have crazy good gross margins and seeing how the top spec'd loaners were picked off so quickly I think there would be a good market for them.
I mentioned this in the Design Studio Updates thread, but I would love to see Tesla release more exclusive options for the performance plus to up the top tier model above $150k. I've driven a Bentley Continental GT and this car is better in performance and as fun to drive, Tesla could capture that car class market if they have options (exclusive colors and aggressive body designs) so the ultra rich can show off their exclusive and expensive MS. This top tier model would have crazy good gross margins and seeing how the top spec'd loaners were picked off so quickly I think there would be a good market for them.
I believe it was the cc of last 3rd qtr that musk said 25% gm based on 20 000 cars but higher if 25 or 30 thousand
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I don't mean to be mean but if your torn and can't decide than you shouldn't be in options especially on margins. I had August calls that I sold and took out December. If report misses or there is a sell off aug calls too risky will not recover. I still have sept calls and will probably rotate those too. The next 3 trading days maybe volatile enough to even make a small profit with the move. My philosophy is that I believe I know where it's headed but can't outline the path
I don't know. This report is probably the last "huge " one. If large beat future calls will expect large beats. For now there are still enough shorts out there that can make this a huge report. Last short interest probably underestimate with prices up since then and gs drop encouraged shorts. I have, for last 3 months thought 130 after this report ( didn't think it would get there before) and 180 to 200 by end of year. Short squeeze, regular consumers coming back to stock market, rotation out of bonds may all make these estimates low. Only personal insights I can add that are not all over the board are
1. Timing on price increases, you know it will be questioned during cc. I cannot believe they don't have the demand to justify. They could have delayed the increase by a week but wanted it out there before the report
2. The ramp up in production he said he wouldn't until margins up
3. A tweet ignored by everyone 1 to 2 days after end of second qtr. he gave the definition of but loads (126 barrels of wine). A funny time to report that. He does have a sense of humor but why share that with his followers. It would be more appreciated by his kids
last point I would like to express is to expect volatility mon tue and Wednesday there are a lot of people with large amount of profit that will take some off the table. Maybe good time to rotate to later options
I wouldn't read into that tweet at all. My wife and I talked about it when he first tweeted it. He retweeted it that tweet from Uberfacts (Twitter / elonmusk: One learns something new every ...). At that time he was following their account and must have liked the tweet. At this time he no longer is following their account.
Jonathan Hewitt
Active Member
Have taken money off previously and sold some stock as well. Decided to buy deep in the money calls. Want to be aggressive but with larger than I could imagine profits didn't want to play usual options. Besides the markup too high for me. Instead I have for example bought 90 strike dec calls. Almost no time premiums. True value goes up a dollar for dollar price rate with the stock. If a short squeeze time premium returns but that's not what I am depending on. I paid about 44. I essentially will make profit on 100 shares per contract versus buying 34 shares and making 1/3 profit. Not very liquid contracts so I will need to exercise and sell stock. Of course if stock goes down will lose more than if I owned stock but strangely enough time premium will return. To answer your question still in but with a less aggressive strategy than high strike options but more aggresive than owning stock
Yeah, I have my options as deep in the money contracts; $90 strikes. I find it odd that these have almost no time premium, but to me the lower strike is a feature. I can dial in my risk exactly. A lot more exposure to price changes without all-or-nothing risk. I actually had $65 strikes and rolled them forward to the 90's because they were getting too boring
That was good move you probably either increased number of contracts with swap or took profit. I am sure you run into same issue I do. Sometimes the brokerages value your contracts at less than you can get by exercising and selling stock. Just irritating doesn't affect you ultimate profit.Yeah, I have my options as deep in the money contracts; $90 strikes. I find it odd that these have almost no time premium, but to me the lower strike is a feature. I can dial in my risk exactly. A lot more exposure to price changes without all-or-nothing risk. I actually had $65 strikes and rolled them forward to the 90's because they were getting too boring
Acmykguy
Member
Forgot to ask: On what do you base your judgments of EU reservation rates? I cannot find much new information on that since guidance the Q1 Shareholder Letter, except that we are able to track Norwegian reservations more or less in real time (by means of the invoice number).
Don't get too excited about that article, because they are talking about GAAP earnings and the street usually focuses on non-GAAP earnings. That -$0.36 loss is possible if 30% - 50% of the vehicles sold get classified as a lease, or if there are significant one time items that we don't know about (but analysts do).
That said, even the non-GAAP consensus is something like -$0.16, so they are way off here too. I agree that there might be a huge short-squeeze coming our way.
Another SA anti-Tesla blurb about losing the ZEV credit 2 days before the Q2 results... they always seem to do that.
I am waiting for the critics (JP, NW, LT, and others) to chime in with how Tesla didn't make enough profit, how other EVs are outselling the Model S, how the gross margins are low, how demand is low because of 500 missing cars, yada yada yada.
Calling it now. We will see an Anti-Tesla piece on SA from NW, JP or LT in the next week with completely wrong data and conclusions
I am waiting for the critics (JP, NW, LT, and others) to chime in with how Tesla didn't make enough profit, how other EVs are outselling the Model S, how the gross margins are low, how demand is low because of 500 missing cars, yada yada yada.
Calling it now. We will see an Anti-Tesla piece on SA from NW, JP or LT in the next week with completely wrong data and conclusions
kevin99
Member
sleepy, somehow I still have the impression the GAAP has more impact on the street, at least in short term ( for a couple of days) until the full ramification ( the Non-GAAP) are digested. An example of that is 2012 Q4, when they released a wider than expected loss and the stock took a dive. I read the the full report and thought it is fantastic. It is everything what a growth company should be doing and all the cost issues are temporary. So I bought some shares and that was the first TSLA share I ever bought!
Kevin - I have only been following Tesla religiously for about 4 months, so maybe you are right. But for most companies, GAAP earnings are not as important as non-GAAP earnings. That is why companies provide non-GAAP earnings, and that is why Wall Street analysts only talk in non-GAAP numbers.
When it comes to Tesla, the only difference between GAAP and non-GAAP is that GAAP includes one-off items (such as the warranty liability write-off in Q1) and GAAP has an additional $15m/quarter of stock-based compensation expense.
Going forward though, there may be huge revenue and net income discrepancies between GAAP and non-GAAP due to lease accounting; especially since internationally it sounds like a higher percentage of vehicles will be sold as a lease. In my opinion, the stock will be priced according to non-GAAP earnings and not according to GAAP earnings. All of the smart money understands that cash flow is exactly the same for Tesla whether it is a sale or a lease.
I can actually argue that lease accounting is favorable for Tesla and should cause the stock to go up even more thanks to it. Since they are delaying revenue recognition, they are also delaying tax payments, which creates a deferred tax liability; and this is a good thing. Imagine if you didn't have to pay the IRS for you capital gains on TSLA until 3 years down the road even if you cashed out your shares today.
If Tesla releases earnings of $0.05 GAAP and $0.40 non-GAAP, I guarantee you that everyone will only be talking about non-GAAP number.
Now if GAAP number looks really ugly, while non-GAAP is just ok; then the GAAP number becomes much more relevant since shorts will try to run with that number.
GAAP numbers have a lot of noise in them due to one-time items, restructurings, bad revenue recognition principles (in some cases), accelerated expenses, etc.
For the long-term investor GAAP numbers are not that important. Maybe they are meaningful right around earnings release for those that bought speculative options, but that is the risk you take with options.
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