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So glad I own TSLA!!!

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  • Nov 23rd, 2020 1:33 pm
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Sold both naked calls and puts right before earnings. $325 Puts sold right before market close, and $600 calls sold late last week. The premiums should pay for the iPhone pre order in a couple weeks haha, basically no movement this ER.
Screen Shot 2020-10-22 at 12.38.47 AM.png
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Ignore the "Price" section...TD's prices column is always wrong after market closes.
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Unlikely to have any equity price effect as other manufacturers recall many more vehicles, but "the recall applies to the bulk of imported vehicles the company sold in China in recent years" according to Bloomberg.*

TSLA's "FSD" beta release may garner more attention, but FYI follow the whole thread...



*Bloomberg article - https://www.bloomberg.com/news/articles ... s-in-china
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deal_with_singh wrote: Sold both naked calls and puts right before earnings. $325 Puts sold right before market close, and $600 calls sold late last week. The premiums should pay for the iPhone pre order in a couple weeks haha, basically no movement this ER.

Screen Shot 2020-10-22 at 12.38.47 AM.png

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Ignore the "Price" section...TD's prices column is always wrong after market closes.
People buy way OTM puts and calls, especially those calls? Gamblers are buying your options, left, right and center. :)
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MoneyHypeMike wrote: Good ER? lol
It actually was a very good quarter. If you look beyond simple headlines. Day to day, week to week stock price movements mean very little unless you're an active day trader.

23.7% gross margins on vehicles is insane. This is excluding regulatory credits!!
Tesla now has $14.5 billion in cash, which is almost the same as Chryslers entire market cap.
2 massive factories opening soon (Austin, Berlin) with production beginning next year.
FSD rolling out in beta.
Buyer intention is going up [buyers who are waiting for their current car to die before getting a Tesla].

This was a great quarter for the company. They could drop the price of their vehicles by 20% and still make money. Meanwhile GM is buying ad spots to promote a simulated 6-figure electric Hummer. They don't even have it prototyped yet, with no way to produce mass quantities.
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ItechJester wrote: It actually was a very good quarter. If you look beyond simple headlines. Day to day, week to week stock price movements mean very little unless you're an active day trader.

23.7% gross margins on vehicles is insane. This is excluding regulatory credits!!
Tesla now has $14.5 billion in cash, which is almost the same as Chryslers entire market cap.
2 massive factories opening soon (Austin, Berlin) with production beginning next year.
FSD rolling out in beta.
Buyer intention is going up [buyers who are waiting for their current car to die before getting a Tesla].

This was a great quarter for the company. They could drop the price of their vehicles by 20% and still make money. Meanwhile GM is buying ad spots to promote a simulated 6-figure electric Hummer. They don't even have it prototyped yet, with no way to produce mass quantities.
"Tesla now has $14.5 billion in cash, which is almost the same as Chryslers entire market cap."
- This is a result of a $5B secondary offering this quarter, and the secondary offerings in the previous quarters...
This is effectively the equivalent of saying Johnny had 1 apple....Johnny had a friend Ronny who had 1 Apple. Johnny and Ronny both split their lunch....how many apples did they each have?
The proportionate cash/share is unchanged.

"2 massive factories opening soon (Austin, Berlin) with production beginning next year."
- China demand doesn't even support the demand within China given they've started exporting...this is where the market is worried.

"FSD rolling out in beta."
- AutoPilot itself is still referred to as Beta. Keep in mind its basically rolling out to die hard fans who will never publicly post any "faults" and just post how "amazing it is". For reference, I don't even use Navigate on Autopilot on highways on my X.

"This was a great quarter for the company"
- They are still relying on reg credits to be net income positive. Which is what the Market didn't like.

"They could drop the price of their vehicles by 20% and still make money"
- No they can't, they wouldn't be able to cover overhead SG&A.

"with no way to produce mass quantities"
- You're telling me a 112 year old company who produces almost 3M vehicles per year (6 x Tesla) does not have any way to mass produce? They're expected to produce 6k next year when they start production in the second half. Model 3 produced something like 300 vehicles in its first year...just remember that.
Last edited by deal_with_singh on Oct 25th, 2020 2:08 pm, edited 2 times in total.
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ItechJester wrote: It actually was a very good quarter. If you look beyond simple headlines. Day to day, week to week stock price movements mean very little unless you're an active day trader.

23.7% gross margins on vehicles is insane. This is excluding regulatory credits!!
Tesla now has $14.5 billion in cash, which is almost the same as Chryslers entire market cap.
2 massive factories opening soon (Austin, Berlin) with production beginning next year.
FSD rolling out in beta.
Buyer intention is going up [buyers who are waiting for their current car to die before getting a Tesla].

This was a great quarter for the company. They could drop the price of their vehicles by 20% and still make money. Meanwhile GM is buying ad spots to promote a simulated 6-figure electric Hummer. They don't even have it prototyped yet, with no way to produce mass quantities.
1. Their gross margins are calculated differently than other automakers, so we can't compare.
2. They don't have that much cash, look at their generated interest income.
3. They are not able to sell every car they produce, I am not sure how those 2 extra factories are going to help them. Apparently, they are shipping cars from China to the EU already.
4. Lol FSD, right.
5. Well I hope for them they have a huge amount of buyers for their car, but more options will be available in the future from multiple companies.

I am not sure which financial report you are looking to say they could drop the price of their vehicle by 20% and still make money when they are currently not even able to make money at the price they are selling their car.
If you know any other company that is "production constrained" and decrease the price of their product they sell to "pass on savings" to their customer, let me know. Apple is not a 2T company for no reason.
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ItechJester wrote: It actually was a very good quarter. If you look beyond simple headlines. Day to day, week to week stock price movements mean very little unless you're an active day trader.

23.7% gross margins on vehicles is insane. This is excluding regulatory credits!!
Tesla now has $14.5 billion in cash, which is almost the same as Chryslers entire market cap.
2 massive factories opening soon (Austin, Berlin) with production beginning next year.
FSD rolling out in beta.
Buyer intention is going up [buyers who are waiting for their current car to die before getting a Tesla].

This was a great quarter for the company. They could drop the price of their vehicles by 20% and still make money. Meanwhile GM is buying ad spots to promote a simulated 6-figure electric Hummer. They don't even have it prototyped yet, with no way to produce mass quantities.
I hope TSLA does hit $1 trillion or more by 2026. Buying ITM puts on a regular basis for sure.
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deal_with_singh wrote: "2 massive factories opening soon (Austin, Berlin) with production beginning next year."
- China demand doesn't even support the demand within China given they've started exporting...this is where the market is worried.
Shipping Model 3 from China to Europe is solving a fundamental bottleneck for Tesla.
Tesla sold so many Model 3 in North America in Q3 that it starved Europe, clients waiting months for their orders.
China is moving to 3rd shift for Model 3, allowing more production at a lower cost, Tesla will bank the extra margins for European 3 sales.
Freemont needs to redirect resources to make more Y, having China pick up the Model 3 production for Europe will help with that.

Tesla is supply constrained.
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SmartElectric wrote: Shipping Model 3 from China to Europe is solving a fundamental bottleneck for Tesla.
Tesla sold so many Model 3 in North America in Q3 that it starved Europe, clients waiting months for their orders.
China is moving to 3rd shift for Model 3, allowing more production at a lower cost, Tesla will bank the extra margins for European 3 sales.
Freemont needs to redirect resources to make more Y, having China pick up the Model 3 production for Europe will help with that.

Tesla is supply constrained.
Don't think that's really the case with the China shipments. When building the factory, Tesla made it clear that the demand in China will not allow them to export the vehicles. Elon (followed by the fan club) then started pushing the narrative that the demand is so high in China, they'll need multiple factories just to support local demand.

Both those things can not simultaneously happen. You cannot export to EU and still claim China demand outstrips china supply.

This is like the Tesla Bears from early on always moving the goal post.

I'm not saying there is a demand problem, its clear they can sell every car they produce (worldwide), but its also evident now that local China demand is not as high as once presumed, and propping up Giga Berlin may result in over supply. Don't think Giga Texas will lead to oversupply as that is likely focused on the CyberTruck and Semi targeting a separate demographic.
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deal_with_singh wrote: This is effectively the equivalent of saying Johnny had 1 apple....Johnny had a friend Ronny who had 1 Apple. Johnny and Ronny both split their lunch....how many apples did they each have?
The proportionate cash/share is unchanged.
I know you know, based on your signature. You’re trying to simplify it. But that’s not how that works. I don’t want others browsing RFD to get misinformed. I won’t get into a deep discussion on this, but no company ever went bankrupt adding billions of dollars every quarter to their cash pile. I’ll leave it at that.

Regarding SG&A, if you want to break it all down you can look at the quarter as one of the highest spending quarters in company history (2 new factories, another one expanding), as well as employee comp. charges (ie Elon’s grants). Also, they’re not relying on reg credits to be net income positive, that’s not true. Yet they still managed to add billions in cash, while also deferring millions in software revenue.
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I want to see where GM is planning on getting 500,000 batteries for their cars anytime soon. Cause I know CATL and Panasonic won’t be providing that to them within the next 3 years.
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China isn’t a 1-to-1. Tesla inventory is down the past quarter (from 21+ days to 17 days). Which means they are selling > than they are making. Made in China Tesla’s have different shipping charges, retaliatory tariffs, cheaper labor, components (nickle batteries) etc. It’s not simply ‘hey let’s ship from China because we’re making too much there’.
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All of this to say: it is arguable that Tesla’s share-price is ridiculous, that it’s unethical they are using the public to train the FSD. But this was a good quarter for the company. Next year, when Tesla is making 800K to 1M cars, in 4 years when they are making 4Mto5M cars, will any of this matter?

Has any of the incumbents produced an EV that is better than a 5-year-old 2015 Tesla Model S? How many incumbents have mass produced an EV that is better than a 2010 Tesla Model S?
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@ItechJester

(1) Assuming ZEV credits are taxed at TSLA's marginal tax rate, the company made less than $100M in Q3 using GAAP. Wait for the 10Q. Not he creative "Non GAAP" stuff that was presented. You can't add back Musk's bonus. That gets expensed.

(2) if you disagree, please show your work on the Cash Flow Statement. Make you CFO, CFI and CFF adjustments, i. e. the $5B Capital raise.
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ItechJester wrote: I know you know, based on your signature. You’re trying to simplify it. But that’s not how that works. I don’t want others browsing RFD to get misinformed. I won’t get into a deep discussion on this, but no company ever went bankrupt adding billions of dollars every quarter to their cash pile. I’ll leave it at that.

Regarding SG&A, if you want to break it all down you can look at the quarter as one of the highest spending quarters in company history (2 new factories, another one expanding), as well as employee comp. charges (ie Elon’s grants). Also, they’re not relying on reg credits to be net income positive, that’s not true. Yet they still managed to add billions in cash, while also deferring millions in software revenue.
---
I want to see where GM is planning on getting 500,000 batteries for their cars anytime soon. Cause I know CATL and Panasonic won’t be providing that to them within the next 3 years.
---
China isn’t a 1-to-1. Tesla inventory is down the past quarter (from 21+ days to 17 days). Which means they are selling > than they are making. Made in China Tesla’s have different shipping charges, retaliatory tariffs, cheaper labor, components (nickle batteries) etc. It’s not simply ‘hey let’s ship from China because we’re making too much there’.
---
All of this to say: it is arguable that Tesla’s share-price is ridiculous, that it’s unethical they are using the public to train the FSD. But this was a good quarter for the company. Next year, when Tesla is making 800K to 1M cars, in 4 years when they are making 4Mto5M cars, will any of this matter?

Has any of the incumbents produced an EV that is better than a 5-year-old 2015 Tesla Model S? How many incumbents have mass produced an EV that is better than a 2010 Tesla Model S?
Trying to simplify it so that most will understand that a cap raise with cash sitting on the B/S doesn't mean the company is financially any better if they received this from new investments rather than operations. At no point did I say this co is anywhere remotely close to bankruptcy. My Point has always been that since about the start of this year, there's been euphoria on the stock leading valuation to get out of hand based on fantasies on what the co can do and become.

Not relying on Reg credits to be net income positive? Based on what? If you remove the reg credits, they're in a net loss. Its also what the speculation was around why it didn't get added to the S&P.

"Yet they still managed to add billions in cash, while also deferring millions in software revenue." - the cash from software sales deferred is still put in full on the cash flow/balance sheet immediately. Just clarifying/confirming in case you meant otherwise.

I don't believe the HumV is meant to be a 500k sales car a year? Its priced higher than the S/X which combined have ~80k annual sales?

Days sales decreasing does not imply they are selling more than they are making. Actual inventory is still increasing. DSI is a hard metric for me to value with Tesla given their end of quarter push. Throughout the month it is significantly higher, and they have a push at the end to boost financials short term. This is definitely doing more damage long term despite helping short term. They need one quarter of just smoothing things out and it will improve both customer experience and overall employee satisfaction.

(I'm speaking from experiencing having my vehicle delivered during an end of quarter rush...and this was before Tesla became mass market when I purchased in 2016). That was a time when I still had an employee go over my car for about an hour and identifying tonnes of issues they didn't correct before delivery...

As far as this being a good quarter goes. Its all relative. Was this quarter enough to justify the stock price? Market doesnt' seem to think so. Thats all.

"Have the incumbents produced anything better than a 5 year old Model S" - Yes. Big time. The Porsche Taycan is a great car, the Jag iPace is a great car, the Audi E-Tron is a great car.
If range is the only metric you're going to go by, then you'll be disappointed, but there is a lot more to a car than its range.

The incumbents only lack in one area in my opinion...and that is charging infrastructure. They do need to build more DC charging stations and have them at reasonable pricing.
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You're right and I'm wrong. Thanks for taking the time to respond. As a general rule of thumb I try not to write essays on forums anymore. Nothing personal. All the best!

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