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

[Fact Checking]

Such a huge GDP drop will have lasting effects for the rest of the year and maybe beyond. Some sectors of the economy, like tourism, travel and leisure, will need 1-2 years to recover. The economy as a whole will suffer. Handing out checks of a few thousand dollars to everyone is unlikely to stimulate car sales.

There's some prior precedents, and most economic modeling by investment banks that they have released recently have GDP drop scenarios of -20% during Q2 and +10%,+10% sharp rebound during Q3 and Q4.

Everything depends on how scared people will be of the coronavirus in a few weeks/months time, how effective treatments are, what the percentages are, and if most people normalize it then life will go on.

 

[MC3OZ]

I recall seeing a tweet from Elon where he was asked about whether they were one or two events, and he said they were separate.

I must have missed that tweet, if there are 2 separate events it will be a busy month or two.

 

[Fact Checking]

edit: "We have" != "We made". But where's he getting them from?

Let me guess, Elon and Tesla in general has excellent contacts to a large country with a population of almost 1.4 billion.

 

[Fact Checking]

I recall seeing a tweet from Elon where he was asked about whether they were one or two events, and he said they were separate.

Does anyone have a link to that tweet? The Twitter search interface is atrociously bad, and they are explicitly keeping Google from crawling all tweets effectively.

 

[Artful Dodger]

Papafox states that for the last two days of trading - Percent of TSLA selling tagged to shorts: = >60%.

The already crazy norm is 30-40%.

No, that's not even close to what FINRA is reporting.

Actual stats since Jan 31, 2020 are 53.7% short sales, +/- 8.8% (1 std dev)
Extremes were Max: 65.7% (Feb 06) and Min: 34.4% (Mar 16).

However FINRA itself only reports on a fraction of total trades conducted on NASDAQ. During that same period, FINRA reported on an avg of just 46.5% +/- 4.1% of all NASDAQ trading.

We can see the snout, but not the whole pig.

The bigger problem with the numbers used by @Papafox is that the 3rd-party data source he uses DOES NOT INCLUDE "Short Exempt Volume", a.k.a. naked short selling.

That's like selling a pig without the oink. Gimme the g*dam oink!

Better to look at the raw data from FINRA themselves. I link to the daily data (3:30 pm ET) with every FINRA Short Selling Report along with my analysis.

Cheers!

 

[KarenRei]

Does anyone have a link to that tweet? The Twitter search interface is atrociously bad, and they are explicitly keeping Google from crawling all tweets effectively.

I don't unfortunately. If I remember right it was just a one-word response to a question from some one else, so it'd be a PITA to find.

 

[KarenRei]

Let me guess, Elon and Tesla in general has excellent contacts to a large country with a population of almost 1.4 billion.

China is going to make a killing on medical exports over the next month or so.

 

[EVMeister]

Does anyone have a link to that tweet? The Twitter search interface is atrociously bad, and they are explicitly keeping Google from crawling all tweets effectively.

If it was clarified it probably would've been around Feb 10th when Elon Tweeted this - Elon Musk on Twitter. I can't see any clarifications there about whether they are different or separate events.

 

[Artful Dodger]

Elon Musk: Should Have 1000 Ventilators Next Week, + 250,000 N95 Masks For Hospitals Tomorrow | CleanTechnica

"Should have over 1000 ventilators by next week.”'

Looks like he’s really doing it. But where's he getting them from?

Here's the comments made on March 20 by Dr. Ezekiel Emanuel on MSNBC regarding Elon Musk providing ventilators:

02:43 (Dr. Emanuel: Social Distancing Is Of Vital Importance | Morning Joe)

"I talked to Elon Musk yesterday about making ventilators. He thinks it is something like eight to ten weeks before his plant can get online."​

So not 1,000 ventilators next week, its 8-10 wks, possibly. Also seems clear Elon intents to manufacture the ventilators in his own plant, without specifying where that plant is located.

Listen/watch Dr Emanuel's comments on Youtube at the link above, starting at 2:43

 

[StealthP3D]

While I agree about many of your other points, I don't think this is necessarily going to happen: ICE sales are suffering just as much, and EV sales are already up from many manufacturers this year. Most European car companies are on track to meet the stricter emissions standards and don't need a relaxation of the penalties.

Some of them, like Volkswagen, might even be lobbying to keep the penalties in place, because it gives them a competitive advantage over laggards. They absolutely want to sell those ID.3's with the sweet ~€20k per unit advantage it gives them over their slower moving competitors.

Agreed. I thought I just read an article in which the European regulator said something like "If the manufacturers think the emission rules will be relaxed because of COVID-19, they will end up in even more pain."

Did anyone else see that? I don't remember where I saw it.

 

[FrankSG]

• Climate change will be taking a back seat for a while now that the pandemic has become concern #1. Going electric may not be high on people’s priority list when they have other concerns.
• Governments all around the world will have to spend trillions to keep their economies from totally collapsing (as an example: the Dutch government said it would need 45 to 65 billion euro just for the second quarter to prop up companies. And we are a small country of just 17 million people). In many countries there will be no money left to subsidize the switch to electric.
• In order to save the European car industry the mandatory changes to fuel economy will likely be relaxed, and fines postponed (which would effectively kill the Tesla-FCA deal).

These things will barely have any impact. The Model 3 had something ridiculous like 70% or 80% US EV market share last year, in spite of being at a tax credit disadvantage to all of its competitors except GM.

Teslas have already reached cost parity with equivalent ICE vehicles. From a TCO perspective Teslas are actually far cheaper than equivalent ICE vehicles, although awareness of this fact still has some catching up to do.

Furthermore, Teslas are one-of-a-kind in a number of ways. You can't buy any other car with an autopilot system like that in a Tesla, and this is only going to be more of a differentiator as time goes on. A Tesla is also the no-brainer EV to buy thanks to the Supercharger network. People who want an EV because they prefer to drive electric, prefer the convenience of not having to go to the gas station, or want the most acceleration for their buck, are mostly going to buy a Tesla.

I agree with you that all new car sales, including Tesla's, will be affected, but there is a long list of reasons why Tesla will be affected far less. Besides the ones I've pointed out above, Tesla is expending their TAM with the Model Y and MiC M3, and Tesla has always had excess demand, especially as of late, so the first x% drop in new car sales will literally have 0 impact on Tesla.

 

[FrankSG]

It depends on how quickly "run its course" is. I'm increasingly being convinced (by the Iceland deCODE and Italian Vó random sampling studies)

Could you explain these in more detail?

I saw similar comments from a nobel prize winner that Elon tweeted about, and I hope this theory turns out to be correct, but I can't say I'm super confident in it yet.

 

[KarenRei]

Could you explain these in more detail?

I saw similar comments from a nobel prize winner that Elon tweeted about, and I hope this theory turns out to be correct, but I can't say I'm super confident in it yet.

Getting a bit OT for this thread, so I'll try to be brief: Iceland has a company named deCODE Genetics, which was designed around doing whole-population genetic studies for disease modeling, so the company has been repurposed into doing randomized sampling of the population to look for COVID-19 in people who are not suspect cases - just the general public. They found the disease in around 1% of the general population over a period of a couple weeks (reported 1 week ago) - an implied per-capita rate twentyfold that of the country's official diagnoses at the time of reporting (which in turn has involved one of the most aggressive testing regimes in the world). Over half had no symptoms whatsoever, and the rest, generally just a minor cold.

In an experiment which started several weeks ago, Italy tested the entire town of Vò in a series of rounds and successfully eradicated the disease from the town. Again, this is one of the few cases of experiments of testing of the general population rather than suspect cases. 3% of the population was determined as infected during the first round. 50-75% of them were entirely asymptomatic. Most of the rest had only minor cold symptoms and did not suspect that they had the disease. During the study, asymptomatic cases usually remained asymptomatic, and most minor cases remained minor.

The net picture is that the disease was already widespread even several weeks ago; that people with no symptoms whatsoever are the majority; and of those with symptoms, symptoms so minor that people don't get tested are by far the most common. To match with the death rate (as severe cases almost always get tested), a widespread disease in the population implies a low IFR (infection fatality rate), and implies that places with overloaded medical systems are overloaded not because the disease sends a large percent of its victims to the hospital, but because a large percent of the population has already gotten infected. This implies that the disease will tend to play itself out sooner.

As mentioned, the other study I mentioned (still preliminary) estimated that Wuhan hit a 19% infection rate at its peak, and that the disease had a non-time-delay IFR of 0,04% and a time-delay IFR of 0,12%. They also found (as others have) that the disease is highly prone to nosocomical transmission (spread inside hospitals and clinics, generally by staff) - that is to say, prone to spread to the most vulnerable of patients. I.e. that stamping out nosocomical transmission is one of the most important steps that can be done. Both Wuhan and Lombardy had extensive problems with nosocomical transmission before the severity of the situation was realized.

ED: Well, so much for trying to be brief...

 

[Tslynk67]

Yes, it's a sad state of affairs when the Governor of New York declares liquor stores as "essential businesses" but California is actively working to stop production of cars that don't emit toxic fumes that make people more susceptible to succumbing to Coronavirus:

New York liquor stores are considered 'essential' businesses, will stay open

Lots of government taxes on booze and cigarettes...

 

[Tslynk67]

Does anyone have a link to that tweet? The Twitter search interface is atrociously bad, and they are explicitly keeping Google from crawling all tweets effectively.

No, but I corroborate that someone did as him on Twitter if the Battery Investor event was the same as the thing at GF2 and he said they were not.

Of course in light of current events, they could revise that.

 

[Tslynk67]

Agreed. I thought I just read an article in which the European regulator said something like "If the manufacturers think the emission rules will be relaxed because of COVID-19, they will end up in even more pain."

Did anyone else see that? I don't remember where I saw it.

Indeed, if anything the current crisis makes the case for tighter emissions very strongly.

And what a pleasure it is to go outside and walk in the streets with little, or no, diesel cars spewing out their filth. The air-quality here in Brussels after a week of diminished activity is dramatically better.

Could the be a simple solution to climate change? One month per year everyone has to just stay home?

 

[MXLRplus]

Yes, it's a sad state of affairs when the Governor of New York declares liquor stores as "essential businesses"
...

Perhaps armed robbers are considered crucial to their economy? Without the liquor stores, and with everybody staying at home, they might starve.

 

[Tslynk67]

I hate to say this as a bull and as someone who got back in at 358, but over the last two days I’ve been getting stronger doubts about a quick recovery for Tesla:

• If the economies of the US and Europe take a 20% hit in the second quarter new car sales will drop by 50% or more. People have other things on their mind, other concerns. This will hit Tesla sales too, despite pent up demand for Model Y. I don’t expect many Model S and X sales, and Model 3 sales will probably be lackluster.
• Such a huge GDP drop will have lasting effects for the rest of the year and maybe beyond. Some sectors of the economy, like tourism, travel and leisure, will need 1-2 years to recover. The economy as a whole will suffer. Handing out checks of a few thousand dollars to everyone is unlikely to stimulate car sales.
• The stock market crash destroyed a lot of wealth, which will have a lasting effect on the sale of luxury cars.
• China may be recovering from the corona crisis, but if demand for products from the US, Europe and the rest of the world dries up the export sector will not get back on its feet. This is such an important part of the Chinese economy that new car sales will suffer.
• Climate change will be taking a back seat for a while now that the pandemic has become concern #1. Going electric may not be high on people’s priority list when they have other concerns.
• Governments all around the world will have to spend trillions to keep their economies from totally collapsing (as an example: the Dutch government said it would need 45 to 65 billion euro just for the second quarter to prop up companies. And we are a small country of just 17 million people). In many countries there will be no money left to subsidize the switch to electric.
• In order to save the European car industry the mandatory changes to fuel economy will likely be relaxed, and fines postponed (which would effectively kill the Tesla-FCA deal).
• The low oil price, which is unlikely to recover during a recession or depression, doesn’t stimulate switching to electric.

I fear this chain of events will set back Tesla for at least 1-2 years. Which is a terrible shame because the path to domination was so clear. Tesla will eventually get back on that path again and it will be in an even stronger position than before compared to the competition, but it will have to go through the ‘valley of the shadow of death’ first, for the third time in its history.

Having said that, I will be buying more shares in case we go under 350. I might not see a quick appreciation of those shares but that’s ok. It may take a few years longer than we expected but Tesla will still become that 1 trillion dollar company.

Thought you were a long, Fred? Now I can understand the trepidation right now, but as I understand it, you've essentially just doubled your number of shares, right? I'd be over the moon if I had been able to achieve that, but I'm too chickenshit to try timing the market with my core shares, just gambling my trading account to try and spin some money there (which is all in LEAPS now...)

Hang in there buddy, might take longer than 6 months or a year, but in 5 years you'll likely be able to retire on what you have.

 

[GaryW]

Does my experience at Tesla compare with others?

Carol and I went to the Orlando Tesla sales and service location. We went Thursday to drop off her model 3, and picked it up yesterday, Friday.

No handshakes, which was a little comical with the sales team. They were having to think about it.

Both days it was crazy busy.

They were delivering 2 or more cars every half hour. I could tell with yellow post-it notes on the windshields.

We saw our first model Y from a distance. It was being charged before delivery.

I wanted to go into the service to take a closer look. They seemed like they would be OK with that, but nobody had time to babysit me at that moment.

They had delivered 4 or 5 model Y’s already.

It’s a gorgeous car.

Gas Has anyone else visited a sales office this week? Interesting typo there, Gary - Mod

If so, what was your experience like?

 

[avoigt]

A lot of the recovery will have to do with consumer confidence and if that is not restores a deeper recession will happen but there is some hope here.

Germany would have been in a recession a while ago but domestic demand kept it running so now its of course a situation where demand in certain sectors will collapse but on the positive site I can write a long list of companies and industries who are booming as I write this. In term of consumer confidence Governments at least here in Germany and I hope other do the same, are making a lot to mitigate the risk for small business as well as big business.

Right now we have here in Bavaria a restriction to meet with more than 2 people outside unless family, so you can go out if you need shopping or anything lese of importance but its recommended to stay at home. Still a lot are allowed to do their daily work, of course from home anyway but also in businesses.

A ton of money from the Government is already provided to companies (short work support) or small even 1 man businesses where you literally have to fill a short one pager with a few questions and can get €5k up to €50k within days as a support measure that does not need to be paid back.

I was skeptical before that politicians mainly do talk and may give tax relief but this is different. Also the German Government is in the process to approve a law than people renting (most people in Germany rent apartments & houses) and who for instance can't pay the bill contracts can't be cancelled so you are save. Thats important.

I describe this in that details because this will IMO effectively help with consumer sentiment.

Today China reported the 3rd day in a row 0 new cases in China and the 41 filed are 100% of abroad traveller. This is an astounding overlooked positive information because it does prove that even if you have 10 thousands of cases and more and more countries including the US will have that you can bring it down to 0 new infections in a pretty short time frame assuming you put the right measures in place. Frankly I did not expect such a positive outcome in China.

Chinese delegations are since a while in Italy trying to help to enforce those measures so we see international support and help from different sites.

Not to mention the majority of companies in China is back to work and also Elons tweet confirmed that hundreds of suppliers for GF3 are operational and delivering.

Here in Germany deliveries are ongoing to the homes of the buyers as well as in SeCs and I don't hear much from cancellations. Will people step back from buying a new car in this uncertain times? Absolutely but the question is rather if the high demand they have will bring the demand below the capacity they have. So demand will remain higher than supply IMO and that matters most.

In my opinion in China people will feel now this is under control and we go back to normal. In that situation people will also buy cars again because the uncertainty is gone. The GDP dive in Q1 will disappear over time since the domestic demand in China is key for Tesla in China.

While Europe and the US have still the worst to come until it gets better in hopefully a few weeks the stock price did price in a global recession or even depression and the resilience of the Tesla stock in the 2 nd half of the week may indeed indicated a bottom has been found. If that is the case there needs to happen a lot to bring the stock price below $350.

Ark invest did do a very fine job in buying right at that bottom for I believe 3 days in 3 tranches each. Great average price and people will later ask how did they know.

So, in short despite we don't know what the future brings and there is a ton of more bad news to be released in Europa and the US but of course also other countries the stock market may have seen the hardest hit so far and it will take a long term for them to recover but I am hopeful that the stock market will level out, panic disappear and people will continue their lives.

Its amazing what is happening to the nature too. In Venice dolphins and fish is now swimming in the city canals something I believe have not been see for generations. Water is that clear you can look to the bottom.