TSLA - Tesla Motors

[Liberty]

Semi spotted driving on the road:

 

[DTEJD1997]

Hey all:

 

TSLA certainly has an interesting product(s)...I'll give them that.

 

I am just not at all impressed with the operation of the company.

 

Compare TSLA to the early F.

 

Both were HUGE disruptors...both had charismatic, genius leaders, both dealt primarily with cars, but had operations in non-car areas (Ford dabbled in boats and aviation for example).

 

There is at least one incredibly huge differential.  Ford was usually profitable, and sometimes insanely so. 

 

Ford made many, many people rich.  Even more importantly, Ford lifted a lot of people out of poverty and solidly into the middle class with the introduction of the $5/day pay in 1914.  When this was announced in Detroit, about 10,000 people lined up outside Ford's hiring office.  The work day was also reduced from 9 hours to 8.

 

Ford also helped create an incredible dynamic and robust manufacturing economy.  Lots of companies sprouted up to supply Ford with tires, glass, steel, paint, and parts.

 

Compare the first 15 years of Ford to the first 15 years of TSLA.

 

I don't think there is much of a comparison, Ford did much better in pretty much any way that you wish to consider.  It isn't even close.

 

 

[Liberty]

Compare the first 15 years of Ford to the first 15 years of TSLA.

 

I don't think there is much of a comparison, Ford did much better in pretty much any way that you wish to consider.  It isn't even close.

 

I agree there isn't much comparison, but not in the way you mean.

 

Ford did great things, but it also entered a market with a huge untapped demand and had basically zero competitors (none that could anywhere match his prices and scale for a while). Musk entered a saturated market (almost everyone who wants  car already has one) and has gigantic entrenched competitors that are all selling cheaper products (when Tesla started, battery costs were so high that they had no choice but to make a $100k sports car if they wanted no compromises on range and performance).

 

Ford might have helped create the middle class, but Musk might have accelerated the transition to more sustainable transportation by catalyzing both supply and demand, and that'll have a huge impact on the whole planet too even if Tesla were to disappear tomorrow (not to mention the impact from SpaceX so far, and it doesn't look like that's slowing down either).

 

It's interesting to look at the parallels, but as with any industrial comparison 100-years apart in a very fast changing century (from Kitty Hawk to Falcon 9 Heavy with boosters that land by themselves), it only goes so far.

[SmallCap]

So, I picked up some Jan 2020 puts for Tsla in Feb (yeah I was lucky in my timing)

 

Bought 2 contracts at a strike of 195 for 19.89 each

Bought 1 contract at a strike of 210 for 21.26

 

Through lucky timing, they are already up over 50%

 

my question is what should I do now, I don't have a good framework for thinking about instruments moving this quickly and what to do about it. my instinct is to do nothing and just go with my original thesis and let it play out.

Not asking you to predict the future but what do you do in these situations, sell some to lock in the profits?

I considered selling some puts at a much lower price point between 50 and 100 to recover my original investment and then let it play out.

Any thoughts?

[Steven B]

Well depends what your original goal was. If you were betting on zero or some other price target, what changed?

[rkbabang]

So, I picked up some Jan 2020 puts for Tsla in Feb (yeah I was lucky in my timing)

 

Bought 2 contracts at a strike of 195 for 19.89 each

Bought 1 contract at a strike of 210 for 21.26

 

Through lucky timing, they are already up over 50%

 

my question is what should I do now, I don't have a good framework for thinking about instruments moving this quickly and what to do about it. my instinct is to do nothing and just go with my original thesis and let it play out.

Not asking you to predict the future but what do you do in these situations, sell some to lock in the profits?

I considered selling some puts at a much lower price point between 50 and 100 to recover my original investment and then let it play out.

Any thoughts?

 

My advice is to sell some, but not all.  I've kicked myself for being greedy with options in the past and holding too long.  I've also kicked myself for selling all too early.  If you lock in some profits now, you won't feel as bad if it goes back in the wrong direction, yet you still leave yourself in a position to profit some more if your original thesis turns out to be correct and it goes in the right direction.

 

[RichardGibbons]

what do you do in these situations, sell some to lock in the profits?

 

My approach is to think about what would make the overall strategy profitable.  For suppose, you originally thought there was a 50% chance of the stock going up (100% loss when the puts expire worthless), and a 50% chance of the stock falling to a level where the puts are worth four times what you paid for them (for an expected return of 100%.)  If you start intending to use that strategy and then you sell the puts for a 50% profit, you're essentially implementing a strategy that on average leads to a 25% loss.  (i.e. if you do it again and again on different stocks, you'll end with a bunch of 100% losses, and an equal number of 50% wins, for an average loss of 25%.)

 

So, I think it's worthwhile to consider what your strategy was when you opened the position and then stick to it unless you have a reason to believe that strategy was flawed in the first place or you have new information.

 

 

[awindenberger]

So, I picked up some Jan 2020 puts for Tsla in Feb (yeah I was lucky in my timing)

 

Bought 2 contracts at a strike of 195 for 19.89 each

Bought 1 contract at a strike of 210 for 21.26

 

Through lucky timing, they are already up over 50%

 

my question is what should I do now, I don't have a good framework for thinking about instruments moving this quickly and what to do about it. my instinct is to do nothing and just go with my original thesis and let it play out.

Not asking you to predict the future but what do you do in these situations, sell some to lock in the profits?

I considered selling some puts at a much lower price point between 50 and 100 to recover my original investment and then let it play out.

Any thoughts?

 

My advice is to sell some, but not all.  I've kicked myself for being greedy with options in the past and holding too long.  I've also kicked myself for selling all too early.  If you lock in some profits now, you won't feel as bad if it goes back in the wrong direction, yet you still leave yourself in a position to profit some more if your original thesis turns out to be correct and it goes in the right direction.

 

I'd recommend hedging the puts somewhat to at the very least eliminate any loss potential should they go against you. One way at this point would be to sell some earlier expiring puts, creating a calendar position. Since you currently own the following:

 

Bought 2 Jan 2020 Put contracts at a strike of 195

Bought 1 Jan 2020 Put contract at a strike of 210

 

Maybe sell some July 2018 puts, say the 185 strike. That way you bring in some premium now, and if Tesla has moved further down by summer but not hit 185 yet, those sold puts will expire worthless and you can sell another batch (say Jan 2019) or get out of the position completely.

[Spekulatius]

I would probably try to figure out when they have to raise equity. I think they have a convert that is underwater and needs to be refinanced in early 2019.

[nickenumbers]

Is this another ride on the Tesla roller coaster, or have people finally woke up to the fact that Tesla is not even close to fairly valued?

 

"If it can't go on forever, it won't."

 

;) ;)

[CorpRaider]

I think he can raise a LOT more capital, but we will see.  I definitely wouldn't be long at this valuation. 

 

According to the Vance biography, GOOGL was going to acquire TSLA at one point of much greater financial strain (of course that would have been a much smaller acquisition, but then again GOOGL had a lot less cash back then too).

 

 

[nickenumbers]

I agree with you CorpRaider.

 

Elon is a freaking magician, and people love his story.  Peter Thiel said to "never bet against Elon."

 

I think too many people with money are willing to throw money at Tesla for nonfinancial reasons.  I love Elon's sentiments, creativity and the innovation.

 

But, as an investor, I put this one in the "Too Hard To figure Out pile."  I pass.

 

But, if it gets back up to $330 again, I will short it with 18 month LEAP options.

[tombgrt]

https://www.captiongenerator.com/960112/Hitler-finds-out-he-is-invested-in-Tesla-bonds

[tombgrt]

https://insideevs.com/exclusive-road-test-review-tesla-model-3/

 

Lol, this is truly a joke!

[Spekulatius]

https://insideevs.com/exclusive-road-test-review-tesla-model-3/

 

Lol, this is truly a joke!

 

Boy, is this interior ugly. I wonder what happens when the central touch screen goes bad when driving.

[atbed]

https://www.cnbc.com/2018/03/29/tesla-recalls-123000-model-s-cars-over-potential-power-steering-failure-reports.html

 

https://insideevs.com/exclusive-road-test-review-tesla-model-3/

 

Lol, this is truly a joke!

 

Boy, is this interior ugly. I wonder what happens when the central touch screen goes bad when driving.

[SlowAppreciation]

Recall announcement after market close heading into a 3 day weekend.

[nickenumbers]

Recall announcement after market close heading into a 3 day weekend.

 

Bahhhhhhaaaaa..

 

3 day weekend of the market being close...  Tesla announces bad new, AGAIN!!!!!

 

This is my shocked face.  ;) ;) ;) ;)

[SlowAppreciation]

Recall announcement after market close heading into a 3 day weekend.

 

Bahhhhhhaaaaa..

 

3 day weekend of the market being close...  Tesla announces bad new, AGAIN!!!!!

 

This is my shocked face.  ;) ;) ;) ;)

 

Must be a coincidence

[nickenumbers]

 

Must be a coincidence

 

 

Bahhhhhhhaaaaaa!!!

 

I am laughing, because otherwise I would have to admit that Tesla is taking advantage of the 24 hour news cycle, insulting our collective intelligence and playing the investing community as fools.!

 

I am almost confident that this is the only gamesmanship that Tesla is playing with investors.  Almost all the other numbers that they are producing and offering are accurate and precise.  ;)

 

I wonder why WEB and C Munger want to partner with long term HIGH INTEGRITY managers...  [wonder why??? ::)]

[walt373]

So, I picked up some Jan 2020 puts for Tsla in Feb (yeah I was lucky in my timing)

 

Bought 2 contracts at a strike of 195 for 19.89 each

Bought 1 contract at a strike of 210 for 21.26

 

Through lucky timing, they are already up over 50%

 

my question is what should I do now, I don't have a good framework for thinking about instruments moving this quickly and what to do about it. my instinct is to do nothing and just go with my original thesis and let it play out.

Not asking you to predict the future but what do you do in these situations, sell some to lock in the profits?

I considered selling some puts at a much lower price point between 50 and 100 to recover my original investment and then let it play out.

Any thoughts?

 

I would say think about the position as if you didn't currently own it. If you were going to buy those puts today, would the price look attractive, and if so, how would you size it? Then sell down (or buy up) to that level. Transaction costs and taxes are a factor. But this exercise should help you consider the position without biases.

[sleepydragon]

Might be a great buying opportunity IMO.

[Spekulatius]

US cavallery is rolling in:

https://finance.yahoo.com/news/elon-musk-just-took-charge-232702543.html

[black-dog]

Cavalry? If you want to believe that Elon's divided attention is only now on the production lines (when he's slept on the production floor before, supposedly) and so on... sure?

 

I really wish the put options & shorts weren't so expensive.

[tombgrt]

(Potential) short sellers rejoice! TSLA back at $300!

 

Options indeed very expensive. I think a bear spread could be more attractive? Then again, if you assume this implodes because they can't attract more capital through equity issuance, what is the use of capping your potential profit... Probably best to wait until the storm blows over a little and hope your timing doesn't suck. Very hard to do.