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

[NicoV]

Of course I'm fully aware of this. They say "support Tesla's main supply chain" - maybe it's another supplier, for instance Samsung batteries, rather than the in-house Panasonic.

I didn’t quote everything from the Tesla pdf. The paragraph above the one I quoted is about what Tesla enforces on it’s suppliers: “
R E S P O N S I B L E SOURCING
Tesla is committed to only sourcing responsibly produced materials. The Tesla Supplier Code of Conduct (Code) and our Human Rights and Conflict Minerals Policy outline our expectations of all suppliers and partners who work with us. Tesla is committed to making working conditions in our supply chain safe and humane, ensuring that workers are treated with respect and dignity and that manufacturing processes are environmentally responsible. Tesla suppliers are required to provide evidence of management systems that ensure social, environmental and sustainability best practices in their own operations, as well as to demonstrate a commitment to responsible sourcing into their supply chains.
Our complex supply chain is a unique hybrid of the traditional automotive and high-tech industries and encompasses suppliers from around the world. Many of our Tier 1 suppliers (i.e. direct suppliers)
do not purchase all of their raw materials directly and instead obtain them from their suppliers and sub-suppliers. Therefore, reliably determining the origin is a difficult task, but the due diligence practices required of our suppliers adds transparency to help us and our suppliers adhere to the responsible sourcing principles of our Code.
Our Tier 1 suppliers are required to register and complete the domestic and international material compliance requirements in
the International Material Data System (IMDS) to meet EU and other international material and environmental related regulations. This requirement is mandated for all suppliers who supply their products or raw materials to us as part of our production-parts approval process. Tesla, along with our partners and independent third parties, conducts audits to observe these principles in action. If there is a reasonable basis to believe a supplier partner is in violation of the Code, Tesla will transition away from that relationship unless the violation is cured in a satisfactory manner.”

 

[Cobbler]

Of course I'm fully aware of this.....

I ....”

I can predict with 100% certainty that the Persgroep will spin it like this:
" Children died in Congo while mining for Cobalt"
" Big tech giants in the US are sued because they reinforce this situations with their high demand for Li-Ion batts"
" Among them is Tesla"
" High demand for EV's causes more young children to die in those mines"
Shows a misleading picture of Model 3 in the article

Not mentioning how LG Chem is the main supplier for their biggest advertisers: Audi/Porsche/Hyundai/Kia/Jaguar

 

[new_sneakers]

$378 in German pre-market - still $15 above my first comment this time yesterday.

 

[Steve m]

The FUD factory is


Oh yeah. The FUD will be working overtime tonight

I fart in the general tslaq direction.

 

[Bet TSLA]

What a day! The shorts just gave me a free upgrade to Tri-Motor with FSD!!! How? I bought 14 Jan 2022 300 SP calls on 11/25/19 after the SP dropped following the Cybertruck reveal. I used cash that I need for a real estate deal, so I was planning on selling by the end of the year, but I thought I would try to make $20k to pay for the Dual to Tri-Motor upgrade. Well, I just sold them for a $34k profit today, so the Shorts paid for my upgrade + FSD + my sales tax. The Tri-Motor cyber with FSD will now only cost me around $46k including taxes. Thank you Shorties!!!

Surely a fair portion of that $34K will disappear in income taxes, won't it? Or are you immune?

 

[Sancho]

Can anyone here predict the future? Do we see margin calls tomorrow morning, or will news of EV credits not being extended bring us back a bit?

I have a terrible track record of predicting short term moves, but like my golf game, I keep taking whacks at it because it’s fun to try. So with that disclaimer:

I don’t think the potential EV credit change has much to do with the rise. This was not a news-based stock movement. It is situation-based. The situation is this is the last full trading week before hard data likely to show strong deliveries. The shorts have an extra incentive to cover this week while volume is high, and new longs need to place their bets soon.

We already saw evidence of this situation playing out all last week. All that happened yesterday morning was a slight acceleration of last week as the window for placing bets closes. It took an hour and a half to push the SP past the 270 barrier for good, but once that happened, then momentum took over, and volume skyrocketed, foreclosing any chance for the usual capping until an outsized gain caused profit taking to finally slow it down.

So for the rest of the week? I say, more of the same. It could be more 20 point gains, or maybe more 5 point gains, and there will be dips and head fakes, sure, but the situation remains the same. Shorts need to cover, new longs need to place their bets. A good deliveries report is about to happen, followed by a good earnings report, the second in a row, that is really going to put a nail in the coffin of the bear thesis.

TSLA is near an ATH, and many of us believe it’s way undervalued. From both a technicals and fundamental point of view, that’s a very good setup for outsized gains to come soon. We are now seeing all sorts of evidence of a very significant turning point in sentiment. I don’t give much weight to Cramer’s turnaround as a cause, but as demonstration of the effect of the general turning point in sentiment, it’s a very strong bellwether.

So, back to the golf analogy, I anticipate the next shot to be very long and straight. However, bystanders would be well advised to be vigilant for the possibility of an extreme slice or hook.

 

[Sancho]

i dunno guys. a 5% gain is not the "short squeeze" i was promised. 420 should be the launching point, not the destination. but it may take some time to really make people realize Tesla's true worth.

i mean seriously -- 3 years ago, there were a ton of legitimate risks to factor in when investing in Tesla: the Model 3 was a fantasy. Tesla was a company with a track record of delivering, what, 30,000 cars per year? liquidity was a real concern. was the demand for the Model 3 legitimate? could Tesla could actually build it? could it be build *at a profit*?? would other automakers have their own trump cards up their sleeves, and beat them to market? would mainstream manufacturers chip away at Tesla's EV market share? would this "tesla fad" die out? would build quality and performance live up to expectations? these were all to varying degrees legitimate risks any investor had to factor in to the company's overall value. and over the last three years, Tesla has emphatically demolished these risks! they are delivering 100,000 vehicles per *quarter*, the'yre making money on their cars at a scary margin, every Tesla Killer has been curb stomped, embarrassed, and exposed, PLUS the company has huge Gigafactories now built in China and pending in Germany.

AND THE STOCK PRICE TODAY IS LOWER RIGHT NOW THAN IT WAS ALMOST 3 YEARS AGO WHEN ALL THESE QUESTIONS COULD STILL BE ASKED WITH A STRAIGHT FACE.

yesterday's 7% gain isn't what's nuts. what's nuts is that it isn't trading at several multiples of what it was in 2016.

Yep. And add to that something very tangibly visual:

When investors and analysts drove home from work three years ago after a big day of TSLA gains, they maybe saw one or two Tesla cars in their 30 minute commute.

When investors and analysts drove home after this Monday’s big SP rise, in the kind of places they live, they likely saw a Tesla every minute.

Seeing is believing.

 

[Mike Smith]

There are 504 Model 3s in the main parking lot, and he says there is also another lot near Zhengjia which is also full.

 

[StealthP3D]

i dunno guys. a 5% gain is not the "short squeeze" i was promised. 420 should be the launching point, not the destination. but it may take some time to really make people realize Tesla's true worth.

Well, no one promised you a short-squeeze. A prediction is not a promise!

i mean seriously -- 3 years ago, there were a ton of legitimate risks to factor in when investing in Tesla: the Model 3 was a fantasy. Tesla was a company with a track record of delivering, what, 30,000 cars per year? liquidity was a real concern. was the demand for the Model 3 legitimate? could Tesla could actually build it? could it be build *at a profit*?? would other automakers have their own trump cards up their sleeves, and beat them to market? would mainstream manufacturers chip away at Tesla's EV market share? would this "tesla fad" die out? would build quality and performance live up to expectations? these were all to varying degrees legitimate risks any investor had to factor in to the company's overall value. and over the last three years, Tesla has emphatically demolished these risks! they are delivering 100,000 vehicles per *quarter*, the'yre making money on their cars at a scary margin, every Tesla Killer has been curb stomped, embarrassed, and exposed, PLUS the company has huge Gigafactories now built in China and pending in Germany.

AND THE STOCK PRICE TODAY IS LOWER RIGHT NOW THAN IT WAS ALMOST 3 YEARS AGO WHEN ALL THESE QUESTIONS COULD STILL BE ASKED WITH A STRAIGHT FACE.

yesterday's 7% gain isn't what's nuts. what's nuts is that it isn't trading at several multiples of what it was in 2016.

I agree with you that Tesla today is worth several times what it was in 2016. But I disagree that it was fairly valued in 2016 given all the uncertainties it faced. I kept looking at TSLA in 2016 but I thought the upside was too limited for all the near-term risks. I couldn't buy it at those prices (at that point in time). Now that it has been de-risked (so to speak), in other words, proven itself on multiple fronts, I think a fair value today is probably around $600-$800.

But it's not for me or you to value it (except to the extent we chose to buy or sell it), it's for the overall market. Supply and demand. I think the market will come around when they see what most of us here can already see. And I think Q4 earnings will provide plenty of fuel to that end. The most important metric to look at is not GAAP earnings because the company is still expanding rapidly. Not that I necessarily think GAAP earnings will be bad but I'll be most interested in gross margins and, more specifically, the trend of gross margins. The GAAP numbers will be what writes the initial headlines but I think the direction of TSLA stock over the following month will be responding more to the gross margins and cash flow than GAAP earnings although GAAP earnings will make inclusion in the S&P 500 Index more certain which will also help drive the share price.

The other thing that could drive the share price is forward-looking statements. With good performance comes more credibility (and I sense Musk is gaining credibility anyway) so any bullish forward-looking statements or announcements will have the ability to drive the share price more than in recent years. Tesla going from $380 to $480 would not be that huge of a move. It would be the same as a $47.50 stock going to $60. So don't do anything foolish when this puppy starts running!

 

[Fact Checking]

I don’t think the potential EV credit change has much to do with the rise. This was not a news-based stock movement. It is situation-based. The situation is this is the last full trading week before hard data likely to show strong deliveries. The shorts have an extra incentive to cover this week while volume is high, and new longs need to place their bets soon.

I agree that yesterday was mostly about something else - maybe Tesla's excellent position in China finally being priced in by institutionals? Or something else?

The EV tax credit possibility and then rejection of it in the Senate was a factor yesterday, but I think the recovery after yesterday's Bloomberg news that the EV tax credit was likely not included in the budget is strong supporting evidence that the EV credit possibility wasn't the big force driving yesterday's move up:

The volume after the Bloomberg news was significant: another ~4 million shares traded, and the initial shorting was almost fully reversed. (Retail investors normally don't have this kind of trading and price setting power, so despite widespread retail optimism about Tesla I suspect there might be institutionals behind it.)

Also, as @Curt Renz noted it yesterday, bears also engineered a couple of negative articles on Forbes, whose release coincided roughly with Dana Hull's Bloomberg article. If only we had a CSIC instead of a SEC, a Criminal Shortseller Imprisonment Committee ...

After-market had a price reaction to the definite news of non-inclusion of the extended EV tax credit as well:

R
​

This too was followed by a marked recovery - not to the previous levels, but still much of yesterday's gain was kept. Just see how little of an overall effect the EV tax credit news had if we look at it in context of the entire 24 hours rally:

Anyway, while TSLA isn't a usual stock, yesterday's price action was definitely on the more curious side of the behavioral spectrum, even within TSLA's standards.

 

[StealthP3D]

Has anyone heard Elon Musk provide his opinion on stock splits? I know it doesn't change anything fundamentally but I think it would send a strong message to announce a 3 or 4 for 1 stock split. Ears would perk up and I think the price would react favorably.

 

[bhtooefr]

So, simple question -

FB: $561.22B
TSLA: $64.83B

...right now, which one is going to grow more in the next 5 years?

It'd take 8.66 Tesla's to equate to 1 Facebook.

And this, combined with the regulatory situation that FB may be in soon, is why I hold FB puts, and TSLA stock (and a lotto call, but mostly stock)...

It's not benefiting Tesla if not IPO or SO - if you're just buying from the market.
So, why not hedge, I don't see a problem.

TSLA stock price being higher means that their stock-based compensation to employees is effectively higher in value, and it means that if they do decide to do a capital raise, less dilution occurs as a result of it. So, it does still benefit them.

BTW., General Motors IMO needed the full EV credit far more than Tesla does now, to reduce the entry price of the Mach-E.

Mach-E is Ford, not GM.

Bolt is GM.

 

[StealthP3D]

I agree that yesterday was mostly about something else - maybe Tesla's excellent position in China finally being priced in by institutionals? Or something else?

I agree it wasn't about tax credits. I like Sancho's explanation above, it was situational.

 

[Fact Checking]

Mach-E is Ford, not GM.

Yes, indeed ... I've removed that reference from my comment, it wasn't part of the main argument anyway.

 

[Fact Checking]

I agree it wasn't about tax credits. I like Sancho's explanation above, it was situational.

I would say it wasn't primarily about the tax credits - the EV credits extension possibility was one factor of the rally.

TSLA setting new 52-week records all day, while macro indices were setting new records as well, could possibly have been part of it. TSLA is also close to the ATH, so for any momentum traders that think that a breakout is probable it's a good point to enter.

But even with all that taken into account the recovery after the Bloomberg news on a tripling of volume was very impressive. Bears clearly jumped on it and tried to engineer a panic via hyper-aggressive sell orders.

I'd guess it was them who were forced to close their tactical short positions near the end of the day, which drove the price back up above $380 - they didn't want to hold a big TSLA short position overnight, while the stock is $10 within a new all-time-high, behind which possibly billions of dollars worth of buy orders are hiding, accumulated over 2+ years ...

There's incredible pressure accumulated in this stock IMO, and what happened this year was possibly just a small part of it. But not advice: a breakout is a particularly dangerous thing to expect near ATH's, which are a favorite price points of big corrections/bounces.

 

[BioSehnsucht]

There are 504 Model 3s in the main parking lot, and he says there is also another lot near Zhengjia which is also full.

Foundations for phase 3(?) have been moving pretty fast. I see they also took down the giant light post in the parking lot (which is occupying space that should be a foundation too eventually, at least based on the depictions of phase 3) where the 100's of Model 3s are. I wonder if they're going to relocate the cars to the new foundation area for now and start building on top of where the cars are before building on phase 3? Or perhaps the space between stamping and battery module/pack buildings becomes a multi-level parking structure (would be one explanation for pile driving)

 

[Fact Checking]

Or perhaps the space between stamping and battery module/pack buildings becomes a multi-level parking structure (would be one explanation for pile driving)

I don't know - this would only slow down carrier loading unnecessarily and would also take away prime real-estate close to the stamping shop.

This is a comparatively rural area of Shanghai, where flat, horizontal parking space is available on the rest of the GF3 plot, and once that runs out, more land is just one land purchase away.

 

[Green46]

From September

Im curious if people are still so sure these would expire worthless.

Oh my oh my oh my. i wouldn't have thrown the kitchen sink at it, but definitely some appliances would have gone.

Any other good deal like that flying around?

 

[Fact Checking]

Oh my oh my oh my. i wouldn't have thrown the kitchen sink at it, but definitely some appliances would have gone.

Any other good deal like that flying around?

Typically not near all-time-highs - only if you are confident that TSLA will rise significantly despite being near an ATH, or you are confident about near-term positive surprises such as Q4 deliveries, Q4 earnings, FSD progress, GF3 progress, Q1 deliveries/earnings or S&P 500 inclusion.

In that case all the long term out-of-the-money call options are mispriced, Black-Scholes and all the other options pricing formulas are essentially bogus for a company with so many potential positive and negative events. Q4'2018 was very optimistic and Q1'2019 destroyed a lot of options portfolios.

Not advice, obviously.

 

[lascavarian]

I am wondering if part of the TSLA action yesterday was Boeing investor money looking for a place to move while that dust settles. Looks like someone knew a bit early that the line was shutting down. At least that might be part of it.