Tesla, the investment

[Tim]

“Shares of Tesla dropped more than 7% after hours on Friday after the S&P 500 Index Committee decided to move Etsy, Teradyne and Catalent into the S&P 500, but abstained from including Elon Musk's electric vehicle and solar energy company.”

There goes one “game changer”.

[Nysoz]

Just because it wasn’t included Friday doesn’t mean it won’t get included in the future. Definitely was a lot of gambling around the inclusion for whatever reason. Whenever it happens I’m sure the speculators will be back.

[fatlittlepig]

i hope the call option buyers got out

[Nysoz]

Found a decent price for leaps so I bought some 2022s and turned them into diagonal spreads.

I think it was oversold in the premarket and appears to be coming back a bit. It's hard to say what 'fair value' is but there's going to be decent support at 350 and strong support at 300.

This dip is supposedly from not being included in the S&P and from Tesla completing a $5B raise by issuing new shares at market value as of 9/4. I view that as a good thing so not sure why the huge dip. They diluted around 1% shares for $5B at market value during last weeks highs. Cash balance on hand is going to be closer to $13B now.

I think that'll lead up to battery day news. They've been hiring a lot of people for new battery production lines for their 'new battery tech'. More cash means possibly faster ramp up for the new battery lines for more batteries. They're going to need a lot of batteries for 2.5 new factory lines of cars, including cybertruck and semi which will take a lot of batteries. Hopefully more energy storage as well.

Around 2 weeks after battery day is q3 delivery numbers. Fremont factory has been going without any major slowdowns/stops and shanghai going strong and expanding as well. It's going to be a record quarter in deliveries and revenue. With the better margins on model Y, profitability has a chance to be really good as well.

Then sooner or later S&P inclusion will probably happen. May be soon (the new shares being issued to large banks in preparation) or later due to other random issues, but would be strange if the S&P actively didn't include them with them being so large and if they continue to be profitable through the next few quarters/year.

I tend to try and look past all this noise and speculation and see how well they're sticking to their overall plan which is going well.

[fatlittlepig]

If I had to guess, we’ll see 150-200 again.

[Tim]

Unfortunately, when Tesla misses the plan, there is only one thing to do. Make a new plan. I am not say it is a terrible company or technology. Over promise and under deliver has been the story.
The bar is so low now that turning a “profit” is considered an achievement to be celebrated.
Elon is a master marketing and publicity hound.
“Battery Day”? Success for Elon. Making something like batteries an event is evident.

https://en.m.wikipedia.org/wiki/Solid-state_battery

Unfortunately, Tesla is leading production of batteries, not the science. Patent ownership has not been their strong suit. Maybe they bought some science.

https://www.ipwatchdog.com/2019/02/19/dont-fooled-patent-purge-elon-musk-just-another-hypocritical-tech-billionaire/id=106525/

Trade secrets are a different matter.
Much of Elon is noise.

[Nysoz]

The main thing that Elon and Tesla has failed to deliver on repeatedly is timing of FSD. I'm not holding my breath for this one but supposedly the new rewrite is coming out in the next few months to be 'feature complete'. I still think autonomous driving will be around in some fashion in 10 years. Probably not the robotaxi future some hope, but in some ways yes. If you look at the past 3-5 year goals, Tesla has hit the majority of them.

Some things have also been promised and over delivered as well. Shanghai factory from dirt to delivering cars in 10 months. Model Y production in the US (and china potentially). The 500k goal for this year would've been crushed if Fremont wasn't shut down for 7 weeks.

Turning a profit is an achievement through covid lockdowns, building 2.5 factories, and while growing 40-50% annually. If they're able to build 500k cars as hoped, that's 40% growth yoy while turning a profit. It'll be a tight squeeze but still possible. In comparison, most other OEMs were shrinking demand and losing money.

Solid state batteries are great, but not anywhere near ready for mass production for EVs. It's going to take at least 5-10 years to develop and bring down costs for any mass market vehicle.

There's definitely a lot of hype around battery day and it may underwhelm analysts and the market in comparison to the run up, but we'll have to see in 2 weeks what comes of it. Tesla does have leading battery researchers working for them and do own some patents. They also bought out the companies that is speculated to have material impact at battery day. Tabless electrode batteries and dry electrode manufacturing. The Panasonic cells are increasing in energy density as well which means less batteries for the same range. Either cheaper cars or better margins or both. In 5-10 years if they can continue to increase battery density to 400 wh/kg that means the cars can go 500 miles between charging. Will we need expensive solid state batteries at that point anymore?

[fatlittlepig]

The main thing that Elon and Tesla has failed to deliver on repeatedly is timing of FSD. I'm not holding my breath for this one but supposedly the new rewrite is coming out in the next few months to be 'feature complete'. I still think autonomous driving will be around in some fashion in 10 years. Probably not the robotaxi future some hope, but in some ways yes. If you look at the past 3-5 year goals, Tesla has hit the majority of them.

Some things have also been promised and over delivered as well. Shanghai factory from dirt to delivering cars in 10 months. Model Y production in the US (and china potentially). The 500k goal for this year would've been crushed if Fremont wasn't shut down for 7 weeks.

Turning a profit is an achievement through covid lockdowns, building 2.5 factories, and while growing 40-50% annually. If they're able to build 500k cars as hoped, that's 40% growth yoy while turning a profit. It'll be a tight squeeze but still possible. In comparison, most other OEMs were shrinking demand and losing money.

Solid state batteries are great, but not anywhere near ready for mass production for EVs. It's going to take at least 5-10 years to develop and bring down costs for any mass market vehicle.

There's definitely a lot of hype around battery day and it may underwhelm analysts and the market in comparison to the run up, but we'll have to see in 2 weeks what comes of it. Tesla does have leading battery researchers working for them and do own some patents. They also bought out the companies that is speculated to have material impact at battery day. Tabless electrode batteries and dry electrode manufacturing. The Panasonic cells are increasing in energy density as well which means less batteries for the same range. Either cheaper cars or better margins or both. In 5-10 years if they can continue to increase battery density to 400 wh/kg that means the cars can go 500 miles between charging. Will we need expensive solid state batteries at that point anymore?

All that may be true but they aren’t selling enough cars to justify the stock price.

[xraygoggles]

Boom goes the dynamite!

Speculators cashing out, retail investors that bought during the run-up (or even worse, after the split) are left holding the bag, as usual.

I have a few friends and family members who did the latter, and will learn a lesson from this (hopefully). At least they only bought a relative small amount....

[Tim]

https://www.businessinsider.com/tesla-elon-musk-electric-vehicle-broken-promises-2019-7

What makes "Musk Batteries" great? Great job of hyping.

[xraygoggles]

If I had to guess, we’ll see 150-200 again.

If it goes to these levels, that would be a great time to get in IMO. My avg buy in price was ~70, post-split, but even i would back the truck up at those levels (maybe).

[hightower]

Boom goes the dynamite!

Speculators cashing out, retail investors that bought during the run-up (or even worse, after the split) are left holding the bag, as usual.

I have a few friends and family members who did the latter, and will learn a lesson from this (hopefully). At least they only bought a relative small amount....

Yes 18% seems like a big drop and when you add that to last week they are down like 30-40% from their peak...but remember that the run up since the announcement of a split was like 70% and that was a totally unjustified bump. So, they still have a ways to go before even getting back down to where they were in July. And then of course they are up like 300-400% for the year. So when you look at the big picture this is barely a blip. Their current value is 342/share which is over $1700/share pre-split. Still nowhere near a level I would feel comfortable buying in.
Should be fun to keep watching though!

[fatlittlepig]

If it goes to these levels, that would be a great time to get in IMO. My avg buy in price was ~70, post-split, but even i would back the truck up at those levels (maybe).

Maybe is right. Nothing like a plummeting stock to scare someone away from buying “low”. The company and technology interest me but the stock doesn’t.

[BCBiker]

i hope the call option buyers got out

All still way in money and up several M. Dips are expected. This was more brisk than desired but no expiration any time soon and lots of good news ahead including S&P whether it happens this quarter or in 2 quarters.

[fatlittlepig]

All still way in money and up several M. Dips are expected. This was more brisk than desired but no expiration any time soon and lots of good news ahead including S&P whether it happens this quarter or in 2 quarters.

Good luck.