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

[azaz]

I did a different strategy with this run-up (I explained it back before I started it in the short squeeze thread). Bought a whole bunch of way OTM calls for Feb and March between January 20-27. Sold 20% of them when they got to 5x to lock in the original purchase and rode the rest. Total investment in was around $20,000. I sold them all Wednesday morning for total of $800K profit. If I had the power of hindsight and sold at $960, I would have had $1.8 million profit! But I am okay with it because my strategy was to hold until I saw a real drop signifying the peak had been crested (I was looking for a 6-8% drop but it gapped down overnight so I ended up selling around $810-820 or so on average). I didn't touch my core share and LEAPs holdings during all of this. I had been preparing for this since 2013 when I first started following TSLA and read about the VW short squeeze. Once in a lifetime opportunity I figure.

thing is we still really haven't had that significant of a short squeeze if Ihor's numbers are right. this week was a juiced options market driving it, not shorts covering

 

[JustSaying]

I post this here solely for the purpose of confirming rollout.

I just got confirmation of my HW3 update for next Wednesday! 2.5 cars ARE being upgraded, and not just in California. YAY!

Dan

Good news, what's the range of your VIN number?

 

[Eugene Ash]

thing is we still really haven't had that significant of a short squeeze if Ihor's numbers are right. this week was a juiced options market driving it, not shorts covering

so when would the squeeze come? ~Battery day?

 

[trailhound]

I think you mean the numbers of options at various prices that expire on a given day. The experts may chime in but my understanding is that if there is a big chunk of calls at say 800 that expire that week and SP is somewhere in that range, the sellers can save money by selling enough shares to drive the price below that number so the options expire as worthless.

She doesn't quite get it about solar yet since her investment house thesis doesn't include the future of the utility industry. One of the top 10 wealthiest men on the planet says he's doesn't invest in utilities to see growth, he invests in utilities to make money.

TeslaEnergy is not to make money on SolarRoof margins (although they may very well with the astronomical scale they can achieve)... they make money off the sale/consumption of kwhs. They will make a lot of money in providing peaker plant services, demand response services, as well as neighborhood to neighborhood markets, which ultimately reduces the cost of homeownership (as well as vehicle ownership) along the way. Now add commercial energy market sales to that, etc...

I haven't seen how many customers they have under TeslaEnergy, but they should be approaching a million customers in 2020, and it could be argued they are all open to adding a battery to the home or commercial site.

If Tesla starts achieving anywhere near 1-2twhs of battery capacity, and it seems they are moving there with the surge of gigafactory construction added to the excitement of battery day announcements, they will very much be scaling powerwall, power pack, and mega pack, to ramp up with solar deployments.

I hope that she starts to venture into exploring this since it will only further support her bull case in 2024. She should look into how many twhs utilities sell a year, project how many twhs will be required to support 23 million electric vehicles in 2024, and give a rough estimate of the market share Tesla might begin to take at that point and beyond and give an alternative stock estimate given different penetration levels of TeslaEnergy into energy sale market domestically and globally.

I must have missed this info- I just checked Giga 1 satellite photo from BuildingTesla and it does look like some dirt work going on.
Could you point me to this new construction info?
thanks- trailhound

 

[azaz]

so when would the squeeze come? ~Battery day?

float has to be reduced, probably post S&P in Q3/Q4 (assuming Q1 will not be profit)

 

[StealthP3D]

If I may ask a noob question: If one wanted to buy an ITM call for late 2021 with the intention to exercise, is there an easy way to determine a good combination of strike price & premium?

It's very subjective. That said, the options sellers use formulas to price them (that's how they got killed selling TSLA $360 calls for under a buck when TSLA was trading just under $300). Formulas are not the silver bullet.

My broker is reporting that Sept. 17, 2021 $750 calls are selling for $197.35. You could have bought the actual stock for that 7 months ago! While I'm bullish on TSLA, those calls require TSLA to be at $950 in 20 months to make a single dollar. I think that's far more likely than not. But the problem is that if TSLA stalls at this price for 20 months you lose your entire investment. Even if Tesla appreciates a respectable 15% between now and then, you still lose money. Owning shares doesn't give you as much leverage but it's far saner.

 

[Foghat]

I was under the impression that SolarGlass roofs is the main focus of solar efforts now, and that is not really a subscription/generation product (that lacks upfront profit/revenue) but instead is a one off high margin sale product with an average selling price equivalent to a car, and they want to ramp this up to thousands of sales a week (with high attach rates for powerwalls).

Sustainable revenue globally will be in the consumption of kwhs.

I agree, the margins over millions of solarglass installs might turn out nice, so they will make money off scaling the installs for a long time (an amazing double boon), but the installs will last 30 years or more, so that market will decrease (way off in the future, but it will), the sustainable money is in consumption of kwhs. Like I've said before, Solarcity(pre-Tesla) was stipulating in their contracts a 50/50 profit share on grid services revenue already, even before aggregated services existed, so the value proposition to solar+storage customers was already in place at that time. Tesla has been ahead of this utility business transformation for a while now.

They will make money off install of solarglass, which is astounding given the real revenue is the kwhs sales from all the energy services. It always makes me laugh at where these analysts come from being car or tech, but none from utility sector since the utility sector has never been a "growth" industry. They have no clue how it works and that is why Tesla have big surprises up their sleeves for a long time.

Just how all the talking heads have no clue about Tesla as the future of auto, they most definitely have the fly over when it comes to the future of utilities and energy as we know it. Feewww, right over the head on this disruption as well.

Analyst start point:

How many twhs will we need to satisfy national consumption plus millions of vehicles by 2024 connecting to the grid instead of the gas pump? How much market share of that $/kwh typically reserved for stagnant traditional legacy utilities could Tesla take in scaling solar+storage, megapacks, grid services... all TeslaEnergy products and services thru 2024 and beyond? And don't forget, Tesla can go to the smallest villages and remotest areas of the globe with their energy products and services, where big utilities can't and will never able to. Almost 200mln people without access to electricity in just India alone, but over a billion users of cell phones(which requires electricity to run) that need to be charged... imagine what a solar+battery install could to alleviate just the disparity that region alone.

 

[JustMe]

So when does the 1st delivered MY hit the streets? before end of Q1?

March. Yes.

 

[Eugene Ash]

They will make money off install of solarroof, which is astounding given the real revenue is the kwhs sales from all the energy services. It always makes me laugh at where these analysts come from being car or tech, but none from utility sector since the utility sector has never been a "growth" industry. They have no clue how it works and that is why Tesla have big surprises up their sleeves for a long time.

Just how all the talking heads have no clue about Tesla as the future of auto, they most definitely have the fly over when it comes to the future of utilities and energy as we know it. Feewww, right over the head on this disruption as well.

True. + i think peak demand services that is where all of it can shine. Kind of VTG 3.0, with exception of V. Stationary batteries instead of natural gas peaker plants. With clever software they can capitalize on both ends, buying at night/sunny+windy days and selling at overcast peaks. But battery constraints to be solved first.

So if i could ask a question at battery day: what's your vision/roadmap for battery-based peak demand shaving? Can heavier battery chemistries be used?

Can't wait till battery day!

 

[Eugene Ash]

March. Yes.

Time for constructing a limit sell ladder : ). How steep ; )?

 

[StealthP3D]

But the minute the stock breaks out without you onboard due to fear/greed for that split second..man that's a devastating feeling. Almost feels like you sold your child.

Worse than that, it feels like you sold your child into the international sex trade.

 

[StealthP3D]

It was the right choice to have 4 doors because having 2 doors will immediate put their car up against the Roadster 2.0 and it'll just get smoked.

True, but it shouldn't be long now before we see a demo of the Plaid Model S smoking the Porsche. Porsche can't win this even when if they were smart about putting four doors on it.

 

[AlanSubie4Life]

Thanks. Yeah, I definitely don't understand fully.



While I see what you're saying in the EPA datafile, this does not mean that 5-cycle testing was actually used, AFAIK.

See this document - 2020 Model 3 P -> Clearly, unambiguously 2-cycle testing; definitely, definitely not 5-cycle testing:

https://iaspub.epa.gov/otaqpub/display_file.jsp?docid=48712&flag=1

Looks like they might be using option "3" in the document linked below, hence the "5-cycle" calculation "Calc Approach Desc" in the EPA datafile. But it appears to clearly be incorrect to take this to mean a 5-cycle test was used. It does mean that they received EPA approval for the chosen scale factor (I think), but the factors taken into account when using this higher scaling factor are very unclear and a mystery to me.

https://www.fueleconomy.gov/feg/pdfs/EPA test procedure for EVs-PHEVs-11-14-2017.pdf

As far as I can tell, all this 2-cycle vs. 5-cycle column entry in the EPA datafile correlates well with is the presence of an (apparently) arbitrary scalar other than 0.7 when converting from 2-cycle results to the "expected" 5-cycle results. You can see here it correlates pretty well:
View attachment 509039

So far, it seems like the higher value just makes the results look better - and there is no indication of the rationale for the increased numbers. I'm not saying that a valid rationale does not exist. I just wish I knew what exactly the rationale was for coming up with a scalar that is 7% higher and increases all the label numbers by 7% relative to a factor 0.7. What is it, for example, about the 19" & 20" 2020 Model 3 P which warrants a more optimistic scaling of their much lower (due to tires) 2-cycle results to 5-cycle results, relative to the 18" 2020 Model 3 P? These should be extremely similar vehicles, and I don't know what would not be captured in the coastdown measurements which would need to be factored into the conversion scaling.

Anyway, I track this scalar in my spreadsheet, even though I don't understand its source:

2020, 2019, 2018 Model 3 Battery Capacities & Charging Constants

Does anyone know why EVs are not required to use the 5-cycle test? Seems like it would be a lot simpler, and would incentivize better cold weather results!

I should add that as mentioned by @KarenRei earlier in this thread, the older results (SR, MR, LR RWD) have not been retested. If they had the results would be better, even if a scalar of 0.7 were used. Due to efficiency improvements, in software and maybe hardware as well.

 

[dakh]

Thanks for hanging in with me for me to understand. I see that your are talking shares rather than currencies and that clarifies. Let me give you an example of my own to see if I understand it correctly.

With a stock share price of (for example) $100, a single option is purchased for $1 (x 100 = $100 but I am not going to worry about that in this example) with a strike price of $500 and expiration of Jan '22. At some point prior to but near expiration the stock share share price reaches $1000. The option could be exercised for 100 shares.

In this case the investment on the option resulted in getting 100 shares (minus the initial $100 investment) resulting in a gain of 100 shares for a stock price movement of 900 points or 500 points above the strike price.

1. If the option is not really close to expiry date, unless you got tax implications there's no reason to exercise since you'll lose time value. Sell (to close) the option and buy stock with proceeds to capture time value.
2. $500 strike in your scenario means you'll have to pony up $500/share to exercise your option, so you didn't gain 100 shares, more like 50 at the current price of $1000 since your got $1000 - $500 - $1 gain in the option price due to underlying going up plus time value in your option. Initial stock price is irrelevant in this calculation.

If stock was held just a little longer and the stock share price suddenly reached $2,000. The additional movement of 1,000 points would result in a dollar appreciation of $100,000 but the stock purchased beyond the first 100 shares would now come at a price of 2,000 per share so only 50 shares would be received.

So in this scenario, the first 900 points of price appreciation (100 to 1,000) yields 100 shares.

The second run of 1,000 points (1,000 to 2,000) only yields 50 shares.

So there is a point of diminishing stock returns that starts at the point of exercise value equaling the option contract price of 100 shares.

Have I essentially got your thinking?

I'm a little lost in this part, but the idea is that as your options go deeper and deeper into the money with underlying going up, your leverage effectively decreases. Extreme example , is not that much different to hold an option with $100 strike if the underlying stock is trading at $2000 than holding stock itself. Option will be worth $1900 plus time value. Being in such a position it would make sense to either buy stock or buy options with strike prices closer to underlying. Another aspect is that liquidity dries up with strike prices far away from ATM (at the money) so you'll end up getting less for your option due to thin trading on those.

 

[sparcs]

float has to be reduced, probably post S&P in Q3/Q4 (assuming Q1 will not be profit)

this time around, most people will expect Q3 to be very positive. There might be another battle before that as they might start covering in mass. Who wants to knowingly sign up for a bloodbath and wait for delivery numbers or earnings in Q3?

Seems like the window for them is closing. Anyways, i've got nothing in it at this point since i'm not using options. Will get my bowl of popcorn ready and wait for the show.

 

[Eugene Ash]

this time around, most people will expect Q3 to be very positive. There might be another battle before that as they might start covering in mass. Who wants to knowingly sign up for a bloodbath and wait for delivery numbers or earnings in Q3?

Seems like the window for them is closing. Anyways, i've got nothing in it at this point since i'm not using options. Will get my bowl of popcorn ready and wait for the show.

I shied away from options too, since i am completely noob. Open to any advice for my spare play funds, separate from my core position.

 

[Hock1]

I shied away from options too, since i am completely noob. Open to any advice for my spare play funds, separate from my core position.

Make it all a "core" position. Avoid expensive, painful lessons. This is advice.

 

[Foghat]

I must have missed this info- I just checked Giga 1 satellite photo from BuildingTesla and it does look like some dirt work going on.
Could you point me to this new construction info?
thanks- trailhound

Giga Berlin, and now GigaAustin being on the table soon, not to mention GigaShanghai just getting up and running. I characterize that as a surge.

 

[Fred42]

Giga Berlin, and now GigaAustin being on the table soon, not to mention GigaShanghai just getting up and running. I characterize that as a surge.

If there's a Texas GF it will more likely be near San Antonio, 1 1/2 hours from Austin. More available labor and that's where the runner up location was when Tesla chose the GF1 site. Nearby Austin would be great for an engineering center.

 

[azaz]

this time around, most people will expect Q3 to be very positive. There might be another battle before that as they might start covering in mass. Who wants to knowingly sign up for a bloodbath and wait for delivery numbers or earnings in Q3?

Seems like the window for them is closing. Anyways, i've got nothing in it at this point since i'm not using options. Will get my bowl of popcorn ready and wait for the show.

it's totally possible we never really get a short squeeze. other thing that makes squeeze tough in these conditions that the rest of the market is doing so well being at all time highs that hedge funds have tons of collateral available to pledge against a margin call. clearly $8-900 wasn't really enough to have any meaningful short covering.