Frank Peelen
@FrankPeelen
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My Tesla Investment Thesis 3: The Complete 2021 TSLA Investing Guide
A deep dive into Tesla's very long term potential, as well as an evaluation of the attractiveness of TSLA options.
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With regards to $TSLA's price action, I have good news, good/bad news, and bad news.
Let's start with the good news
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I ❤️
@elonmusk
@DrEliDavid
If WFP can describe on this Twitter thread exactly how $6B will solve world hunger, I will sell Tesla stock right now and do it.
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What's going on with $TSLA?
Forward P/E is now at ~30, which is less than $NVDA and not far off $NFLX, both of which are expected to grow revenue single digits compared to Tesla's expected 55% revenue growth.
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1/18
Long thread ahead of $TSLA's first S&P week with some advice.
First off, to people only holding stock, my general advice is sit back, relax, and watch the show. Even before factoring in Tesla Energy and Autobidder, EVTOL jets, cooperation with The Boring Company, HVACs,
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Dear $TSLA retail,
Tesla, Elon, and the board's only responsibility is to execute on Tesla's mission statement. They neither have to nor should:
1-Use 50% cash to bb 2% shares with a looming recession
2-Waste time fighting every FUD piece
3-Make the SP go up in a straight line
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My Battery Day Thoughts:
I continue to be thoroughly impressed by the Tesla team. Drew and the other engineers are rock stars. Super smart and motivated. I much prefer a hardcore technical presentation like this over the recent Cadillac and Lucid PR fests.
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My finance prof just now when discussing DCF and using $TSLA as an example:
"What would $TSLA be comparable to in 10 years? Perhaps at that point it would be comparable to $BMW"
What universe does he live in that he believes $TSLA in 10 years may be similar to $BMW today 🤣🤣🤣
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All of this cutting edge AI tech (and vehicle development, factory development, battery tech development, and more) for just $2B in R&D over the last 12 months.
Meanwhile, Nvidia spent over $4B and Volkswagen spent ~$14B. Tesla engineers are superheroes!
#AIDay
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1/14
Here's an update on my current take on $TSLA. But be aware, this is just one person's opinion, that could turn out to be wrong.
The most interesting thing so far, since the S&P announcement, has been the lack of volume. This means two things:
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I disagree with this take. The value of FSD that turns an ordinary vehicle into a robotaxi is immense. Far greater than $12k. If anything, the full price will go up as we get closer to robotaxis.
The reason why they are lowering the monthly price, I suspect, is because they are
With Tesla's monthly FSD (Supervised) now at $99, it would take 10 years to reach the same total cost as buying it outright for $12,000.
Of course it won’t stay at $99/month forever, but I wouldn’t be surprised if Tesla drops the buy outright price.
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GM is more likely to go bankrupt by 2025 than it is to catch up to Tesla in U.S. sales of EVs.
Also, in 2025 Tesla is more likely to outsell GM in the U.S. counting all car sales than GM is to catch up with Tesla in anything.
GM can “absolutely” catch Tesla in U.S. sales of EVs by 2025, CEO Mary Barra tells
@Lebeaucarnews
.
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Tesla's S&P 500 Inclusion Part 2: Predicting the transformation of the TSLA float
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$TSLA's 2023 P/E ratio (based on analysts' forecasts) is now well below $NVDA's and on par with $NFLX's.
This is in spite of $NVDA and $NFLX being expected to grow revenue <10% and $TSLA >50% in 2023 compared to TTM.
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18/18
To summarize:
1) It's still hard to beat $TSLA over the next 10-15 years.
2) Eliminate unacceptable outcomes.
3) Have a plan. Adjust it, but don't abandon it due to emotions.
4) There will be profit taking. Be careful not to be overly influenced by the momentum changes.
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Great news for $TSLA shareholders! The SEC is going after people pumping $GME on social-media, so this must certainly mean that they are also going after $TSLAQ and every short seller who manipulated $TSLA in the past decade, right? .....right?!? 🤔
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Tesla just can't catch a break.
Tesla employees are, in the words of the CFO, putting forth "extreme efforts" to attempt to reduce the order backlog. but so far their efforts have not had any success.
And now this? At this rate, Tesla's demand problems will never end...
BREAKING: Hertz orders 100,000 Teslas in a car-rental market shake-up
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1/9 Exactly.
There's so much hate towards large amounts of wealth, but the real issue is excessive consumption. It's vital to distinguish between the two, and to understand the difference.
@podcastnotes
Who is best at capital allocation – government or entrepreneurs – is indeed what it comes down to.
The tricksters will conflate capital allocation with consumption.
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New Blog Post!
TSLA Jan'25 Options & The Current State of TSLA
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14/17
However, fundamentals win out in the long run, and not many companies have stronger fundamentals than Tesla. It is very well positioned no matter what happens economically. So anyone holding $TSLA common stock that doesn't need to sell soon, has nothing to worry about.
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1/12
Something may be going on with $TSLA short interest this year. Something reminiscent of the past that I thought $TSLA had moved past after 2020 and the S&P inclusion.
This thread explains what I noticed this week.
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Looking at how, for most of $TSLA's trading session today, there's been a flurry of selling every time it peaks its head out above $640, it seems plausible that Zach/Tesla have set today's lower limit for shares offered through the brokers @ $640. We'll see if/when they run out.
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Tesla is not selling a Standard Range Model Y in some markets (USA), and I think they'd prefer to position the Model 3 at a bit lower pricepoint. This will also give Tesla some more runway until the cheaper Robotaxi is ready.
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My view on Tesla's plan for Superchargers:
Tesla is all about AMaaS (Autonomous Mobility as a Service), and the recent progress in FSD I believe has shifted how
@elonmusk
sees Superchargers. Resulting in him rebuilding the team from scratch in order to better achieve his
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1/18
$TSLA's S&P 500 inclusion is finally here, and it's shaping up to be a truly unprecedented inclusion. I outlined a few of the reasons why $TSLA's inclusion is so special in this blog post a few months ago:
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We're two days from $TSLA's S&P 500 inclusion, and we just witnessed the lowest first 15 min volume since November 16th, before the announcement. Only 4.02M shares were traded by 9:45AM.
#eerilyquiet
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15/17
And to finish this tweet thread off, here's a little bonus:
I think it's becoming very suspicious how Elon keeps saying that "this is not the right platform to make product announcements". There's definitely something brewing there. Just a question of when we find out.
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1/9
As an investor, it's extremely important to distinguish between risk and variance. Variance is often short-term market noise, risk is risk to one's investment thesis. An investor must distinguish between the market's opinion (current value) and his/her own opinion.
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4/17
This reminds me of Price T Rowe making the mistake of a (company) lifetime in the first half of 2019 and selling its 10% stake in Tesla for ~5B, whereas <2 years later it would've been worth >$100B.
Somebody most definitely got fired for that mistake😕
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TSLA Options: Are Call Spreads the Future?
Sharing some research I've done over the past week into TSLA call spreads.
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5/5
The market can be irrational for periods, and it could get even more irrational (although today's CPI data is positive news), but personally I'd be shocked if $TSLA stays below $200 long into 2023, barring some crazy black swan event.
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I believe I've figured out who the mystery $TSLA investor is. Although it's still possible $BRK invested in $TSLA during Q3'20, I believe Softbank very likely took on a massive stake in $TSLA during Q3.
1/16
Thread on Berkshire Hathaway and Tesla.
Yesterday, I pointed out in this quoted thread that, based on data I gathered from 13F filings, a large number of TSLA shares seem to have gone missing during Q3, to the tune of 100M shares.
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have to keep up with Tesla's pace of innovation. They don't just have to attract the right talent and spend money on the right R&D, they have to fundamentally change how they operate in order to drastically change their pace of innovation, or else they will get left behind.
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I also believe that the Model 3 'highland update' is going to position it lower in the market. It'll be cheaper to produce through incorporating Model Y learnings, and thus either prices will be dropped, or, if this has already happened, margins will improve.
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Today, Tesla already has a large lead in batteries, powertrain, software, engineering, manufacturing, etc. Battery Day made it clear that Tesla has some of the smartest people in the world working hard on continuously improving every piece of the entire battery supply chain.
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1/12
Tweet thread with my thoughts on $TSLA earnings.
A bad ER for investors focused on the short-term (financials), but it contained some really great nuggets for long-term investors.
Let's start with the reasons why financials were weaker than deliveries might've suggested:
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What the actual ****. How does somebody like this, with such an extreme (& idiotic) bias end up in charge of an authority supposed to regulate a company that her bias is against.
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5/6
This is my biggest take-away from Batt day. Tesla is not just getting further ahead, it's increasing the rate at which it's getting ahead. Many will not understand this, but in order to survive, Tesla's competitors don't just have to keep up with Tesla's innovations, they...
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The pace of innovation and numbers presented today seem absolutely absurd. These advancements will over the next years likely do the same for Tesla's batteries as Starship will do for SpaceX's rockets. It will make all competitors secondary, if not obsolete.
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Tesla is truly a once in a generation company, and $TSLA is a once in a generation investment.
It's mind-blowing how far it has come considering the amount of adversity and resistance it has faced, but where it plans to go is even more mind-blowing.
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Tesla may have to drop prices to sell every car and hurt margins, but at the same time there are numerous margin headwinds:
-4680 cost savings
-Front + rear castings
-Structural batteries
-US tax credit
-Commodoty prices falling
-Operating leverage
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The final chapter in my $TSLA S&P 500 Inclusion series. A relatively short post that attempts to analyze what happened last Friday, and clears up many misconceptions present in the community about the closing cross.
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Everybody says Tesla can't do it alone, but how does anybody keep up with this? No automotive company has been able to keep up with Tesla's pace over the last decade, and now that Tesla is increasing its pace how will the gap anything but widen?
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@elonmusk
Contrary to what MSM is reporting, working at Twitter looks like a lot of fun right now!
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2023 is shaping up to be a terrible year economically, but Tesla should have no trouble selling every car it makes, because demand for EVs vastly outpaces supply. Furthermore, high oil prices are a part of this crisis until Ukraine conflict ends, which further pushes EVs.
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1/16
Thread on Berkshire Hathaway and Tesla.
Yesterday, I pointed out in this quoted thread that, based on data I gathered from 13F filings, a large number of TSLA shares seem to have gone missing during Q3, to the tune of 100M shares.
1/18
$TSLA's S&P 500 inclusion is finally here, and it's shaping up to be a truly unprecedented inclusion. I outlined a few of the reasons why $TSLA's inclusion is so special in this blog post a few months ago:
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9/17
The good/bad news (or really more of a reminder) is that delta hedging is still very much affecting $TSLA price action. Market makers are currently amplifying downward movements, but they will also amplify future upward movements.
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Rob: Confesses he has never driven a Tesla.
Me: I don't even have a driver's license 😅
Enjoy your Model 3, Rob!
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2/18
manufacturing as a service, electric boats, and various other potential lines of business, Tesla's long-term potential is enormous.
Tesla is basically untouchable in automotive, autonomy, and autonomous mobility as a service. Tesla will be a monster of a company 10-15 ...
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8/17
The good news in all of this is that the majority of this price action has in all likelihood been caused by a single (or at most a few) entity that changed its opinion on $TSLA.
Most likely just one big firm changed its opinion. That's behind the drop from $160 to $120.
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I expect Tesla's EBIT margin to stabilize around 20% (currently ~16%), but for Tesla's current price action to make sense, one would have to believe it will drop to something closer to 10%.
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Why do you even care about this? If I wanted to own stock of a company whose CEO focused on near-term stock price, I'd have owned stocks like BMW, Daimler, Toyota over the past ten years. Those CEOs have neglected the future and paid dividends non-stop.
Those who don’t see the relationship between Elon buying $TWTR and $TSLA underperformance since 4/14 (when Elon made his TWTR bid) are fooling themselves. TSLA’s beta vs NDX over the past year is 1.375, so beta adjusted TSLA should be down -21.3% vs actual -41.7% since 4/14.
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The good news is that it's pretty obvious that the price action over the past week and a half has been driven by a very large (non-Elon) seller.
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Keep in mind, I could turn out to be wrong, and there's a fair bit of speculation on my side here, especially when it comes to a lack of supply during the closing cross on the 18th. Maybe front-running will intensify to a point where there will be mostly adequate supply.
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I am SO glad I am not a $TSLA options market maker this week. In this table, for each strike price, the number in the red column times 100 is approx. the number of shares market makers risk having to sell, if the stock ends above that level and the options are exercised.
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5/17
Ironically, it is possible that it is once again Price T Rowe making the same mistake of a (company) lifetime, because it had re-accumulated 47M $TSLA shares as of the end of Q3'22.
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years from now, selling and managing massive fleets of AEVs. If you're worried $TSLA might be becoming overvalued, perhaps so looking backwards, but it's still a hell of an investment looking far into the future.
I explained all this in this post:
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Furthermore, $TSLA may not significantly recover until a buyer with deep pockets decides it wants to own $TSLA. In the current economic climate there are not a lot of people buying stocks, and there is a lot of uncertainty ahead.
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9/9 However, if a billionaire wants to build a $2B home, or own a $600M yacht, this should be taxed heavily. An argument can be made for taxing purchases like this as much as 200-300%, in order to disincentivize economic resources being allocated to such needlessly lavish things.
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S&P Inclusion Part 2 blog post is done!
Page count: 73
Word count: 14,847
Character count: 86,101
Now I'll just have to go over everything to fix errors and polish. I have some things I have to do this afternoon, so I'll probably be able to post it tomorrow (Tue).
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"You can turn someone into a freaking butterfly, if you want, with the right DNA sequence." -
@elonmusk
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3/17
Looking at the volume of shares traded, my guess (really just a guess) is that at least on the order of 50M shares have already been sold off. Elon sold 20M in 3 days pushing the stock down ~10%. This has been 6 days in which the stock went down 25% on even higher volume.
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12/12
In summary, $TSLA financials were slightly below expectations, due to investments for the future. Nothing to worry about for LT investors.
Instead, focus on the LT vision, production growth, FSD progress, and how exciting the AI opportunity is.
Can't wait for AI day!
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If you need to divest 40% of your $TSLA to finance the purchase of a house in January, and it is unacceptable to you to have missed the opportunity to sell @ $700, then sell as soon as it reaches $700, and don't bet on it going higher, even if you think it likely will.
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The bad news in all of this is that ultimately a stock price is determined by buyers and sellers. If this is CWI dumping their entire $TSLA stake, we might have quite a way to go to the bottom. They controlled >150M shares between main fund and mutual funds as of Q3'22.
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10/17
These two blog posts explain delta hedging and $TSLA's enormous options market in more detail:
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4/14
In my opinion, all of this means that quite little has happened thus far. The vast majority of buying is still to come, BUT I also believe some selling has been 'postponed' by shareholders who believe they can sell for more during the coming weeks.
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10/18
My final piece of advice is to not read too much into short-term price movements. The next 1-2 weeks could be very volatile for $TSLA. If a very large run-up indeed happens, it's not a question of if, but a question of when pullbacks will happen.
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This is just plain wrong.
Far and away most of the difference in valuation stems from Tesla's dominance in EVs, which are the future, and other automakers' intertwinedness with ICEVs, which is going to be the undoing of a lot of them.
@WholeMarsBlog
To be fair, investors are giving us significant credit for achieving self-driving, given that Tesla’s valuation/production is very high compared to other automakers
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The other possibility is CWI (Capital World Investors), which has had a massive $TSLA stake since forever, not just in its main fund but also in a number of its mutual funds, such as $AGTHX.
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I think $TSLA is more likely to settle at ~$800 than ~$600, and I can't rule out much higher peaks. However, at some point big shareholders will start divesting from $TSLA and options holders will start cashing in, so I don't believe a true infinity squeeze will happen.
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7/17
I don't think Baillie Gifford owned enough shares (28M) as of the end of Q3'22 to have caused this by itself, but it is of course not impossible that there was more than 1 large seller.
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17/18
The lesson to learn here is to be careful about being overly influenced by big short-term price movements. They are often (but not always) due to profit taking/momentum trading. So don't blindly assume a top has been reached when there is a brief pullback.
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Who's going to manufacture it? Certainly not Apple. Elon was right when he said that Tesla's biggest long-term advantage will be manufacturing. The only ones that could manufacture at the scale required to compete have shown themselves to be too slow and unwilling to change.
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stick too much to your original plan, than to be too fickle.
The reason for this is that a plan should mostly be based on logic, whereas decisions made on the fly are much more likely to be influenced by emotions.
Adjust your plan, but have a plan.
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5/18
My first piece of advice is to be aware of what outcomes are unacceptable to you, and to eliminate the possibility of them occurring entirely.
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5/14
It's bullish that big shareholders are willing to postpone their selling, because this means they too believe $TSLA will go higher in the near term, as well as that they don't mind having missed selling $TSLA at $600 and $650 if they turn out to be wrong.
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12/12
In summary, I'm not claiming nefarious entities have for sure resumed attacks on Tesla through shorting. It's tough to hurt Tesla rn.
However, the resumption of the $TSLA SP and SI inverse correlation this year is interesting and maybe something to keep an eye on in 2023.
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The advice I'm trying to give here is to not automatically assume a top has been reached when there's any sort of pullback. It's easy to get scared at times like this, but it's important to make decisions based on data and logic. The past week was a perfect example of this
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1) Buying so far has been limited. There's definitely been some front-running, speculation, and delta hedging, but I don't believe any big entities have started buying.
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Owning $TSLA is like owning a percentage of the transportation sector. Unless we no longer need to transport people/goods from point A to point B, or unless teleportation is invented, long term $TSLA should do well in just about any macro-economic climate.
Just so you know tesla is probably the best stock to hold during inflation. It has almost a hard line demand which means I can raise prices. It has low debt and plenty of cash, which is exactly what you want when money becomes expensive. It has a crazy moat.
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@garyblack00
@ray4tesla
Indexers 'only' needs 120M shares? 16% of the float is massive.
The 43% increase has been on surprisingly low volume. I highly doubt that 120M 'real trades' (non-HFT, non-MM, non-day trader) have happened since $TSLA S&P announcement.
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Although early 2018 was cutting it close for a while, I think discussing "the possibility" means that
@elonmusk
wanted a back-up, in case they could not fix the Model 3 production issues. I don't believe Tesla got close enough to insolvency for this deal to have gone through.
@wintonARK
During the darkest days of the Model 3 program, I reached out to Tim Cook to discuss the possibility of Apple acquiring Tesla (for 1/10 of our current value). He refused to take the meeting.
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Today, I asked my financial accounting professor if a VA (short for valuation allowance - used to account for uncertainty in things like Deferred Tax Assets) is a type of provision. He was like: "How the hell do you know what a VA is? We ain't covering that in this class" 🤣
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2) Selling has been very sparse. Although $TSLA had reached $500 before, $600 and $650 are significant new ATHs, and one would expect various entities to be happy to trim their $TSLA positions at these levels, but going off of volume this has been very limited so far.
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6/18
If you have 20% of your portfolio in short-term calls, and seeing 20% of your portfolio going up in smoke is an unacceptable outcome to you, trim that position immediately, so that it is impossible that 20% of your portfolio will go up in smoke.
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24M shares imbalance at 3:50PM
16M+ shares imbalance still now at 3:53PM
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4/18
For people who have no choice but to time the market during the next couple of weeks, either because they hold options, or because of a need to sell some shares (living expenses, big purchase, etc.), I have three pieces of advice.
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7/14
If you've read this blog post, and seen my prediction model, it should come as no surprise that I think the buying that's to come still outweighs the built-up selling pressure at this level.
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13/14
All in all, I think most of $TSLA's S&P inclusion is yet to play out (doesn't mean most of gains are still to come), and I think that it's slightly less likely there will be a peak and drop, and that it's more likely some of the gains will come in the week after inclusion.
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The Mach-E is a compliance car. Ford still profits when factoring in EV creds.
It's now been 10+ yrs since Tesla launched the Model S, and a lot of manufacturers (e.g. GM & F) are still stuck making compliance cars.
Seems like these companies would rather die than switch to EVs
NEWS: Ford CFO says inflation has erased Mustang Mach-E profits, but isn't hurting demand for new vehicles.
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I finished this monster blog post a day early, and I decided I didn't feel like waiting until after the S&P announcement.
Enjoy!
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6/9 It makes much more sense to heavily tax and disincentivize excessive consumption, and distribute that tax towards things like public housing, public healthcare, etc. than to tax excessive wealth, and effectively take away voting power from those best suited to have it.
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8/9 Taxing
@elonmusk
is like taxing humanity's future. Taxing
@WarrenBuffet
is like taxing charity.
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Anybody else catch this one? What the hell was that. Somebody just threw away $300k by selling $6 under market price?
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@heydave7
The cost to compete with Tesla on autonomy is at least 10x that number. $10B is just for AI hardware, but that doesn't get you any data.
If a competitor (e.g. Waymo) wanted the same amount of data as Tesla, they'd have to spend ~$100B annually to buy EVs and more hundreds of
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GM expects annual revenues to double by 2030?
If GM still exists in 2030, I'll take the under on that.
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12/18
it crashes the market, how are they going to sell the other 90% or 95% of their holdings for a good price? Big shareholders will generally sell off positions more slowly, and swift crashes are generally more likely to be caused by momentum traders.
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7/7
"We have no interest in satisfying the desires of day traders. I couldn't care less. Please sell our stock and don't buy it."
- Elon Musk during Tesla's Q1'18 earnings call
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