TSLA Market Action: 2018 Investor Roundtable

[KarenRei]

Interesting he didn't have the report to look at. There is a link in the dedicated thread to the report and I posted a breakdown of their cost estimates. Boils down to this:

Breakdown of Black, Long Range RWD, PUP Car
Price $49,000
Factory Cost $34,720
*Operations $10,650
Operating Profit $3,630

Breakdown of Black, Standard Range, RWD non-PUP car
Price $35,000
Factory Cost $30,250
*Operations $10,650
Operating Profit $-5,900

*Operations consist of D&A, Warranty, Freight, R&D, SG&A

The German teardown study also estimated about $10k in operations. But they came up with a radically different materials bill, $18k. Barely over half what UBS thinks (when the German teardown study came out, Musk responded on Twitter that they got it right).

The info in that thread is really telling. I knew UBS was doing something funky, but that's just off the walls. Double-counting SG&A? Charging for cells what it costs Tesla for whole modules? $2,2k for the pack's non-cell costs, but then adding a BMS and charging cost on top of that, despite it being part of the pack? Basic math errors? Just bonkers.

 

[MXWing]

They don't want to, or can't, ship them so they are holding delivery events in different locations to try to get everyone to come pickup their not-a-flamethrower.

They have talked about having a crew take a van around the country to personally deliver them, but large delivery events are more cost effective.

That makes no sense to not being able to ship it. I can go to Amazon right now to buy a propane torch and have it before 8PM.

Delivery event is unnecessary.. unless they plan on having a bunch of 3P for test drives...

 

[KillerAngel]

Any thoughts on what's going on with these options premiums? SP is doing just fine, but the premiums keep getting punched in the face. I'm holding a few ITM and OTM calls and they've lost a ton of value in the last day and the SP is about the same - or a little better. Bah!

 

[Boomer19]

Any thoughts on what's going on with these options premiums? SP is doing just fine, but the premiums keep getting punched in the face. I'm holding a few ITM and OTM calls and they've lost a ton of value in the last day and the SP is about the same - or a little better. Bah!

they do seem to be deflating, even stuff well below 400

IV dropped to 45-50% for now to oct
dec and jan19 50-55%

maybe mkt feel deal details release is far away so we’ll trade rangebound which removes some IV, and sucker bets volume is played out.

 

[Yonki]

That makes no sense to not being able to ship it. I can go to Amazon right now to buy a propane torch and have it before 8PM.

With nail polish?

 

[beachbum77]

they do seem to be deflating, even stuff well below 400

IV dropped to 45-50% for now to oct
dec and jan19 50-55%

maybe mkt feel deal details release is far away so we’ll trade rangebound which removes some IV, and sucker bets volume is played out.

Calls and puts are both deflating about equally. It would indicate they got overheated and no one is seeing a big swing in either direction before November. That seems to fit with the reported timetables for any privatization and determination announcements.

 

[EarlyAdopter]

Any thoughts on what's going on with these options premiums? SP is doing just fine, but the premiums keep getting punched in the face. I'm holding a few ITM and OTM calls and they've lost a ton of value in the last day and the SP is about the same - or a little better. Bah!

Volatility has declined. The stock has settled into a narrow range around $320, so the IV component of those option premiums has declined.

 

[KillerAngel]

they do seem to be deflating, even stuff well below 400

IV dropped to 45-50% for now to oct
dec and jan19 50-55%

maybe mkt feel deal details release is far away so we’ll trade rangebound which removes some IV, and sucker bets volume is played out.

Volatility has declined. The stock has settled into a narrow range around $320, so the IV component of those option premiums has declined.

I guess that makes sense. I appreciate the insight. Thanks to you both.

 

[Fact Checking]

Wow, today's TSLA price action:

• The $320 price barrier seems to be holding strong for a second day. Will it survive end of Friday weekly options expiry machinations?
  
• Only around $4 of volatility today - the historical average daily range for TSLA is $10-$17 (!). If the trading range gets reduced longer term due to the barrier and due to constant selling pressure then this would explain recent decreases in options premiums.
• TSLA ignored the big rise in NASDAQ and the usual correlations with macro were a lot weaker than usual. My guess is that some correlation/arbitration desks noticed the strong barrier and stopped correlation-trading TSLA.

I'm really curious about whether the barrier is going to survive today and whether it will be present next week as well.

If yes then one (speculative) interpretation of the barrier would be that:

• Elon Musk's Tesla buyout consortium is buying all shares below $320, and are putting them into a common pool.
• That pool will be distributed among the buyout partners, in proportion of their contributions to the $420 buyout. This solves the 'front running problem' between buyout partners rather elegantly.
  
• This reduces the cost of the buyout significantly, especially if they start raising the price barrier to get closer and closer to $420, to trigger more and more selling from shareholders who cannot or don't want to own $TSLAP shares.

Haven't seen anything like this before - does anyone know of a historical example of merger/buyout partners installing a price peg in the open market?

Or could this be a third party perhaps, a really strong buyer or merger/buyout arbitration trader?

 

[MXWing]

With nail polish?

Yes. I'm also excited about my upcoming iPace. I want to make the best use of its frunk storage. I think a package of tampons should fill out the space nicely.

 

[beachbum77]

Wow, today's TSLA price action

Or could this be a third party perhaps, a really strong buyer or merger/buyout arbitration trader?

I think this is the more likely possibility.

Think about it. We are about $30 below where the SP was at the time of Musk's tweet. So how much more downside could there be if no deal emerges? However, there is a potential $100 upswing with a 50/50 possibility of a deal. If you have the bucks that is a hard bet not to make at this point.

 

[IamJohnGalt]

I like this consolidation around 420 and have been accumulating today. The Bollinger bands are squeezing and the silence is deafening. Low volume! This thing is set to move hard in one direction or the other. Breakout to the upside is my gut feeling. There is just no substance to the FUD and >6k models threes per week will make TSLA money. The short narrative is sounding more and more desperate and I give the going private a probability of .95 and negative ramifications associated with the SEC investigation and class actions to be a non-issue.

 

[Tslynk67]

320, dude...

Slow news-day, huh? Not much happening in $TSLand, other than solid fundamentals, that is...

 

[IamJohnGalt]

320, dude...

Slow news-day, huh? Not much happening in $TSLand, other than solid fundamentals, that is...

Wow...Freudian slip there I guess. Thanks for pointing that out.

 

[Fact Checking]

I think [third party buying at $320] is the more likely possibility.

No, third party buying at $320 with a publicly visible price peg is an extremely dumb and inefficient way to buy a stake in Tesla.

If a big buyer wants to buy a lot of TSLA shares then it's better to allow the price to drop further, which will create a lot of liquidity from weak longs selling - and also lowers the price. By putting a peg in place you are also telegraphing your buy price, which allows others to front-run you.

I only listed that possibility for completeness.

If the price peg holds beyond Friday and into next week then pretty much the only thing that makes financial sense is if it's the buyout consortium: they are communicating via the $320 price! If this peg rises slowly in the future then it will be a clear signal where the negotiations are standing.

If indeed that's the case then it's genial: using the public stock price as a public signal.

 

[MXWing]

No, third party buying at $320 with a publicly visible price peg is an extremely dumb and inefficient way to buy a stake in Tesla.

If a big buyer wants to buy a lot of TSLA shares then it's better to allow the price to drop further, which will create a lot of from weak longs selling - and also lowers the price. By putting a peg in place you are also telegraphing your buy price, which allows others to front-run you.

I only listed that possibility for completeness.

If the price peg holds beyond Friday and into next week then pretty much the only thing that makes financial sense is if it's the buyout consortium: they are communicating via the $320 price! If this peg rises slowly in the future then it will be a clear signal where the negotiations are standing.

If indeed that's the case then it's genial: using the public stock price as a public signal.

Whatever they are doing, they are time bound to score current prices until first week of October.

 

[CuriousSunbird]

I’ve decided I’m in the market for a used X . Only problem is they are still out of my price range.

Found some cheaper new ones for you.

Tesla Inventory List - Find your next car

 

[Fact Checking]

Whatever they are doing, they are time bound to score current prices until first week of October.

BTW., they only seem to be actively trading at and below $320, so they are not in fact buying anything - they are communicating a minimum price peg in essence.

Once market participants believe the price peg they won't have to do much buying themselves - it will be done by others.

Of course the next minute of price action could prove the '$320 price peg hypothesis' wrong!

 

[bdy0627]

Wow, today's TSLA price action:

• The $320 price barrier seems to be holding strong for a second day. Will it survive end of Friday weekly options expiry machinations?
  
• Only around $4 of volatility today - the historical average daily range for TSLA is $10-$17 (!). If the trading range gets reduced longer term due to the barrier and due to constant selling pressure then this would explain recent decreases in options premiums.
• TSLA ignored the big rise in NASDAQ and the usual correlations with macro were a lot weaker than usual. My guess is that some correlation/arbitration desks noticed the strong barrier and stopped correlation-trading TSLA.

I'm really curious about whether the barrier is going to survive today and whether it will be present next week as well.

If yes then one (speculative) interpretation of the barrier would be that:

• Elon Musk's Tesla buyout consortium is buying all shares below $320, and are putting them into a common pool.
• That pool will be distributed among the buyout partners, in proportion of their contributions to the $420 buyout. This solves the 'front running problem' between buyout partners rather elegantly.
  
• This reduces the cost of the buyout significantly, especially if they start raising the price barrier to get closer and closer to $420, to trigger more and more selling from shareholders who cannot or don't want to own $TSLAP shares.

Haven't seen anything like this before - does anyone know of a historical example of merger/buyout partners installing a price peg in the open market?

Or could this be a third party perhaps, a really strong buyer or merger/buyout arbitration trader?

The price range yesterday and today is very similar to a week ago on August 15 and 16, just before the NYT hitpiece. I would be absolutely shocked to see this continue next week.

 

[Boomer19]

BTW., they only seem to be actively trading at and below $320, so they are not in fact buying anything - they are communicating a minimum price peg in essence.

Once market participants believe the price peg they won't have to do much buying themselves - it will be done by others.

Of course the next minute of price action could prove the '$320 price peg hypothesis' wrong!

this is exactly what em wanted, except $100 lower

2.7mm volume...nobody cares about tsla anymore