Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[FrankSG]

I outlined my hypothesis yesterday:

"Guys, TSLA float is 141.9 million shares, and today 46.3 million shares were traded, which is 32.6% of the float.

This is truly remarkable: I believe what is going on is that 3 forces are reducing the float:

• "Don't sell below $5,000" long term holders - they are effectively insiders who don't sell,
• S&P 500 indexing accumulators who'll need these shares in a few months and who won't sell them,
• Shorts covering - where short positions covered destroy a matching number of long shares.

32.6% of the float trading in a single day might be a signal of too few shares available in the float already ...

If true then the squeeze might become more VW-ish."​

I forgot to list a fourth and fifth factor:

• Options writers and market makers delta-hedging. There's an incredible amount of open interest on the call side, well over 50 million shares equivalent ...
• Some really bug funds with a short TSLA position or naked call options might be close to blowing out (is Jim Chanos's fund fine - did they never write naked call options?) - and Wall Street might be smelling the bl**d in the water. Why sell to them before it's clear who exactly those getting squeezed are? This would further reduce the float ...

If true then the "effective float" of TSLA might have become too small, and the buying comes from distressed shorts and S&P 500 exposed investment funds fighting over too few fish. Also, shorts covering will further decrease the float, which presses up the price as new buyers have to convince existing shareholders with higher and higher price targets to part with their shares...

So it's a vicious circle, a self-reinforcing cycle, and the narrowing of the float created the VW squeeze as well. (Although under very different circumstances.)

I have no idea whether my hypothesis is true, but the percentage of the official float traded, which must in reality be significantly smaller, is truly remarkable.

What's the over-under on $1,000? 9:45? 9:50?

 

[davecolene0606]

It’s now designated....

“NATIONAL BATTERY DAY”

Fire Away!
(It’s the batteries, Stupid!”

 

[JRP3]

Bonds could(and should) fund a renewed and deeper dive into zero-down residential energy products.

How? They can't produce enough products for the orders they have now.

 

[dl003]

Great that we got MMD out of the way by 7:00 pm last night.

 

[The Blue Owl]

Tesla's surge is largely due to fear of missing out, says ROTH's Irwin

 

[TSLA Pilot]

.

But trading wise, at this point you are probably feeling a bit uncomfortable holding auch a huge concentrated position. George Soro's feeling based trade strategy says "sell till you feel comfortable". Don't worry about taxes. Having a even and strady trader's psyche is important.

The bit that you want to hold, consult your accountant. Usually it involves a lot of effort and cost 10k+ (maybe 30k now after inflation) to set up but it'll be worth it once done. But you have to be SURE that your assets will remain bigger than this as most of these strategies doesn't make sense for assets under a certain amount.

Oh, we are certainly NOT selling--we're still buyers with our last monthly purchase over $500!

We're still in the first innings of TSLA here--when ARK and/or Ron Barron are suggesting a $7k share price,with excellent commentary as to why it will likely reach such lofty values, why would we ever sell?

This is purely a "generate cash" situation to monetize the asset value . . . .

 

[Fobble]

Jim Cramer on CNBC: "TSLA should exceed F + GM combined. Nobody is selling. Battery Day is coming."

If fact, he said "TSLA should be double F + GM combined"

 

[hoang51]

Would you be willing to elaborate?

I couldn't place any trading order and couldn't view my stock holdings. There was even a notice message stating they knew of the problem and was working on fixing the problem.

 

[Silentk]

 

[keydiver]

Mobile app? Does it work outside US?

Would it work if you used a US VPN?

 

[SteveG3]

fwiw, as I've mentioned here in the past, my fair value estimate for Tesla Auto alone is $600 currently. To be clear, I do not think Tesla Energy or Tesla Network are worthless, of course. I do not ignore them either. I simply see them both as dramatically more challenging to estimate revenues and earnings 5-6 years out with any considerable confidence as compared to Tesla Auto (Tesla Network being the more challenging of those two).

My $600 for Tesla Auto is based on a $1200 +/-$300 2026 fair value estimate.

My overall 2026 forecast for Tesla is $1200-2000, knowing that might be VERY conservative.

This means a couple of things...

1) I think it might be really helpful to start dedicated threads for Tesla Network 2025/30 (revenue, earnings, fair value), Tesla Energy 2025/30 (r, e, fv), and Tesla Auto 2025/30 (r, e, fv) so we can turn the considerable collective wisdom here towards trying to map out these developing pictures by comparing notes on forecasted assumptions, reasoning for those assumptions, and the earnings, etc., that those assumptions spit out.

2) I sold my first core shares today at $592.xx, 1% of my holdings. I'll let go of up to 6-7% in total if this move makes it to $630, and do this again from about $670-730 for another 7% or so. fwiw, If I was real young, and didn't almost 'certainly' already have as much money as I'm ever going to spend, I might not of let go of those shares. ie, circumstances vary, I'm not saying anybody should sell as much (or as little, if the shoe fits) as I did. What I would recommend is that you make buy/sell/hold decisions in relation to what you think the fair value of Tesla is based upon a forecast of future earnings several years out from now.

I never would have had anywhere near the TSLA gains I have without TMC, and the people here. All the best, regardless of varying perspectives!

Steve

Update: I'm down to about 75% TSLA 25% cash after selling about another 5% in the $830s and another 5% at $880 both this morning. I'll sell another 5% if we get to high $900s. I've sold in the $600s as mentioned in the prior post, and the $700s.

rationale in quoted post above. I also think there's a reasonable chance the nature of this move involves some fundamental change to the short position. it could be Blackrock or some other mammoth whale getting in, which, would be more durable.

to be clear, that quoted post is my take on circumstances re Tesla, another key part of the equation of selling some or not is one's unique personal circumstances.

 

[theschnell]

I am a long (planning on holding for several more years as price appreciates toward that $15k number).

I've set a trailing stop loss of $200 just as protection against a force majeure event--as many know I've been here and/or checking the price nearly daily for a decade now. Any thoughts on whether that trailing stop loss amount of $200 is now too small given volatility, and the fact that $200 is only 22% of share price? I figure I can adjust it daily as needed.

Great way to get stopped out on a temporary $200 downswing

 

[Sancho]

I outlined my hypothesis yesterday:

"Guys, TSLA float is 141.9 million shares, and today 46.3 million shares were traded, which is 32.6% of the float.

This is truly remarkable: I believe what is going on is that 3 forces are reducing the float:

• "Don't sell below $5,000" long term holders - they are effectively insiders who don't sell,
• S&P 500 indexing accumulators who'll need these shares in a few months and who won't sell them,
• Shorts covering - where short positions covered destroy a matching number of long shares.

32.6% of the float trading in a single day might be a signal of too few shares available in the float already ...

If true then the squeeze might become more VW-ish."​

I forgot to list a fourth and fifth factor:

• Options writers and market makers delta-hedging. There's an incredible amount of open interest on the call side, well over 50 million shares equivalent ...
• Some really bug funds with a short TSLA position or naked call options might be close to blowing out (is Jim Chanos's fund fine - did they never write naked call options?) - and Wall Street might be smelling the bl**d in the water. Why sell to them before it's clear who exactly those getting squeezed are? This would further reduce the float ...

If true then the "effective float" of TSLA might have become too small, and the buying comes from distressed shorts and S&P 500 exposed investment funds fighting over too few fish. Also, shorts covering will further decrease the float, which presses up the price as new buyers have to convince existing shareholders with higher and higher price targets to part with their shares...

So it's a vicious circle, a self-reinforcing cycle, and the narrowing of the float created the VW squeeze as well. (Although under very different circumstances.)

I have no idea whether my hypothesis is true, but the percentage of the official float traded, which must in reality be significantly smaller, is truly remarkable.

I totally agree with your hypothesis, except that you are defining way too narrowly the demand side. S&P exposed funds is just a piece of the demand. There are trillions of dollars of investment money that has been sitting on the sidelines. Every hour now another investor is waking up to the Tesla story and pulling the trigger. Chinese, Saudis, Russians. Retail, institutional. Whatever.

Really, who the buyer is, whether short seller, option hedger or new money, doesn’t matter. The only real question is, when does big money start to SELL?

Ron Baron just gave his answer. Never. He’s not alone here.

 

[Chickenlittle]

I outlined my hypothesis yesterday:

"Guys, TSLA float is 141.9 million shares, and today 46.3 million shares were traded, which is 32.6% of the float.

This is truly remarkable: I believe what is going on is that 3 forces are reducing the float:

• "Don't sell below $5,000" long term holders - they are effectively insiders who don't sell,
• S&P 500 indexing accumulators who'll need these shares in a few months and who won't sell them,
• Shorts covering - where short positions covered destroy a matching number of long shares.

32.6% of the float trading in a single day might be a signal of too few shares available in the float already ...

If true then the squeeze might become more VW-ish."​

I forgot to list a fourth, fifth and sixth factor:

• Options writers and market makers delta-hedging. There's an incredible amount of open interest on the call side, well over 50 million shares equivalent ...
• Some really bug funds with a short TSLA position or naked call options might be close to blowing out (is Jim Chanos's fund fine - did they never write naked call options?) - and Wall Street might be smelling the bl**d in the water. Why sell to them before it's clear who exactly those getting squeezed are? This would further reduce the float ...
• Retail investors who bought the dip last year between May and October are still a couple of months away to be able to lock in long term capital gains tax rates. Selling right now would mean giving up 20% of the investment position, so steep was the rise. This takes out from the float those investors who'd otherwise consider divesting a bit, to dip-buy 10-20% lower. But to sell now they'd have to be convinced that the dip will be significantly deeper than 20% ...

If true then the "effective float" of TSLA might have become too small, and the buying comes from distressed shorts and S&P 500 exposed investment funds fighting over too few fish in the pond.

Also, both shorts covering and S&P 500 exposed funds buying their ~0.4% allocation will further decrease the float, which presses up the price as new buyers have to convince existing shareholders with higher and higher price targets to part with their shares...

So it's a vicious circle, a self-reinforcing cycle, and the narrowing of the float created the VW squeeze as well. (Although under very different circumstances.)

I have no idea whether my hypothesis is true, but the percentage of the official float traded, which must in reality be significantly smaller, is truly remarkable.

I agree with your post. Those 46 million shares that traded could represent multiple trades of a smaller number of shares that indicates float is too small

 

[SMAlset]

Woke up to news on “The Street” of TSLA pre-market having topped 900. OMG it was true. Thought maybe I was still sleeping.

https://www.thestreet.com/investing/tesla-tops-800-chasing-toyota-as-most-valuable-carmaker

 

[CorneliusXX]

And I have been a VERY SUCCESSFUL TSLA Investor since early 2013. Are we in an echo chamber? I know in this day and age, many of us do not like to deal with facts. Too bad, because as an investor, we should know our competition...it actually makes us smarter.

I am glad people discuss the competition here and welcome the comments. That said, the timing isn't great in the middle of the Tesla share price party.

 

[gene]

Are we going to miss the $800's during trading hours altogether?

 

[Burrito]

so i doubted myself at around 250 and OBVIOUSLY missed the boat on this amazing run. too late to join the part today at ~900?

 

[StealthP3D]

So I think if the stock continues to follow the roughly 10x 2013 pattern we are looking at $850-$1,000 range for the rest of the month. Then sitting above $1,000 for March, maybe $1,300 after deliveries and $1,800 by the end of June.

It may or may not do that. If it does, it won't have anything to do with how it behaved in 2013. It would be pure coincidence. Which tells me it probably won't do that. Pretty much everything about the current setup is different from 2013.

 

[wnorris]

The most surprising thing is the lack of filings on new investors crossing 5% ownership thresholds.

This is what has been surprising to me as well. I would have thought that either the Japan GPIF, T Rowe Price, or Norway would have been discovered as a big buyer causing this run-up.

My gut is saying that someone is driving this to maximize short pain. This does not feel like accumulation by a whale.