Musk endeavours

[odysseus2000]

They are currently predominantly traders stock with lots of the profit giving movement that traders seek

I would entirely agree, and Musk does a great job of enriching traders who are fleet of foot!

But that is a very different issue to is "Tesla a good investment"? (not trade), and that is about the quality of the product, ability to deliver and perform as promised, long term reliability. Those are issues which you have promoted here, as being so good for Tesla that other car companies are in real trouble. And yet I, and I'm sure many others, would argue those remain unproven. It takes many years of production experience to learn how to do that well, and many more for a reputation of that sort to be developed with end users. And Tesla remain a long way from that, and their CEO seems intent on distracting them from the real issue.

None of that means Tesla is not a good car company, or that it will not prove itself to be worthy and reliable over time (though a paradigm shifter it is not), but at present, and with the current behaviour of the CEO, the outcome is far too murky for me to regard it as a possible investment. If I were a trader and looking to make a quick buck, helped on by daft tweets, then I might see it otherwise.

Peter

I am looking ahead and making my case on what I see Tesla doing and what I see legacy auto doing.

Imho legacy has missed the boat here and is in trouble. My evidence for this is the BMW profit warning and the decisions by all the major manufacturers to abandon both diesel and hybrids and to go for all electric. For example just a few years ago Volvo were promoting their diesel as the engine they would use for a decade or so, now they have gone electric and are phasing out diesel. Many other makers went for hybrids and are no phasing these out and going for electric. In all these case substantial r&d and capex is being written off and this will hurt legacies balance sheets.

Legacy may catch up and Tesla may go under. All autos are very high risk.

We have seen what iPhone did to established phone makers and imho Tesla are set upon doing something similar to legacy auto. I could be completely wrong which is why I continually type that most folk should not invest/trade in Tesla. There is potentially a high reward in Tesla equity but there is also a big risk. If it ever looks like Tesla will create a very successful business the price will imho be a lot (say 5-10 times higher) than currently, but it could be zero if they screw up.

Regards,

[Howard]

Tesla has been one of my best trading vehicles this year.

Regards,

Out of interest, Ody, when did you buy and sell over the last year?

I'm genuinely interested because, in general, I'm a long-term investor and not brave enough to indulge in short-term trading. To make a really worthwhile return one would have had to buy in March at around 250 and sell in June or August at around 350 a 40% gain. That would have been unimaginably impeccable timing! Any more trades would have incurred more costs and risks surely?

regards

Howard

Hi Howard,

I trade in the US where brokerage fees are much less and I have done multiple Tesla trades. With trading as I practice it I am both interested in knocking the ball out of the park and also taking singles. In general the singles are much easier to harvest and there is much less risk.

I rely on price action and using techniques based on price action to enter and exit and I have spent a lot of time and money learning how and how not to do this.

So in your use of price action techniques are you sometimes shorting Tesla and at other times going long?

regards

Howard

[odysseus2000]

Out of interest, Ody, when did you buy and sell over the last year?

I'm genuinely interested because, in general, I'm a long-term investor and not brave enough to indulge in short-term trading. To make a really worthwhile return one would have had to buy in March at around 250 and sell in June or August at around 350 a 40% gain. That would have been unimaginably impeccable timing! Any more trades would have incurred more costs and risks surely?

regards

Howard

Hi Howard,

I trade in the US where brokerage fees are much less and I have done multiple Tesla trades. With trading as I practice it I am both interested in knocking the ball out of the park and also taking singles. In general the singles are much easier to harvest and there is much less risk.

I rely on price action and using techniques based on price action to enter and exit and I have spent a lot of time and money learning how and how not to do this.

So in your use of price action techniques are you sometimes shorting Tesla and at other times going long?

regards

Howard

Mostly I prefer the long side and getting out before price comes off.

My reason being that down moves tend to happen fast as do bounces in down moves and require that I pay a lot more attention, whereas longs are a little slower and imho more often show the point when the odds favour a reversal, but some short players disagree.

Regards,

[PeterGray]

If it ever looks like Tesla will create a very successful business the price will imho be a lot (say 5-10 times higher) than currently

But will it? Tesla already has an mcap larger than Ford and GM, and about 70% of VW group. I regard those as pretty large successful companies. So Tesla is already priced for a massive amount of growth in production, revenue and profit. Are they really going to end up being valued at 5 times GM and 3-4 times VW on the back of looking like they will "create a very successful business". It's going to have to be more than that, it's going to have to look as though they will take over from Nissan. It takes a massive leap of faith, and belief in your theory that Tesla are somehow not a car company as we know it, to think in those terms. I'd stick to trading them!

Peter

[odysseus2000]

If it ever looks like Tesla will create a very successful business the price will imho be a lot (say 5-10 times higher) than currently

But will it? Tesla already has an mcap larger than Ford and GM, and about 70% of VW group. I regard those as pretty large successful companies. So Tesla is already priced for a massive amount of growth in production, revenue and profit. Are they really going to end up being valued at 5 times GM and 3-4 times VW on the back of looking like they will "create a very successful business". It's going to have to be more than that, it's going to have to look as though they will take over from Nissan. It takes a massive leap of faith, and belief in your theory that Tesla are somehow not a car company as we know it, to think in those terms. I'd stick to trading them!

Peter

I agree completely, but once in several generations we get someone who does make an extraordinary difference to the world and ends up making a huge amount of money.

Is Musk that kind of person? As far as I can currently see he has more chance of doing something extraordinary than anyone, but the odds are still against him as they were against Apple with the iPhone.

What ever happens I believe it will be an interesting watch, hopefully one that pushes humanity forwards rather than backwards.

Regards,

[odysseus2000]

NIO, competitor to Tesla, attracts Tesla investors:

https://www.bloomberg.com/news/articles ... lenger-nio

Big bets being placed that NIO or Tesla will become large in electric cars.

Regards,

[odysseus2000]

Tesla latest software enables shadow mode for autominous driving, but not full autominous mode:

https://www.digitaltrends.com/cars/tesl ... ving-mode/

Regards,

[Howyoudoin]

Tesla latest software enables shadow mode for autominous driving, but not full autominous mode:

The short term price signs for Tesla look rather (aut) ominous.

HYD

[WorldCupWilly]

Tesla prospects:

Latest in FT:

https://ftalphaville.ft.com/2018/10/10/1539144000000/About-that-Tesla-third-quarter--profitability-/

Aswath Damodaran blogs:

http://aswathdamodaran.blogspot.com/2018/06/twists-and-turns-in-tesla-story-boring.html
http://aswathdamodaran.blogspot.com/2018/08/the-privatization-of-tesla.html

Not sure I'd be backing Musk even if he's served a useful role in disrupting the industry.

WCW

[odysseus2000]

Tesla latest software enables shadow mode for autominous driving, but not full autominous mode:

The short term price signs for Tesla look rather (aut) ominous.

HYD

If you shorted from much higher up would you still press your bet or cover and take your profit.

I expect most traders short Tesla to cover to be sure of a good profit and only the die-hard Tesla bears to stay short.

The experience of the die-hard Tesla bears does not seem to have changed their opinion that Tesla is doomed.

We shall see.

Regards,

[odysseus2000]

Tesla prospects:

Latest in FT:

https://ftalphaville.ft.com/2018/10/10/1539144000000/About-that-Tesla-third-quarter--profitability-/

Aswath Damodaran blogs:

http://aswathdamodaran.blogspot.com/2018/06/twists-and-turns-in-tesla-story-boring.html
http://aswathdamodaran.blogspot.com/2018/08/the-privatization-of-tesla.html

Not sure I'd be backing Musk even if he's served a useful role in disrupting the industry.

WCW

Personally I would make no investment/trading decisions on FT analysis which has shown it self to be hopeless on things with high emotional content.

Tesla is not a stock that moves much on its accounts unless they show bankruptcy and for now that looks unlikely.

The trend is toward profits, whether they get there is still unknown.

Regards,

[WorldCupWilly]

The trend is toward profits, whether they get there is still unknown.

Regards,

If you read the Aswath Damodaran blog and believe in his valuation methodology, Musk has to pull off the equivalent of a "Royal Flush" to deliver in the long term.

I guess if all you are interested is volatility and the trading opportunities it presents, that matters rather less.

WCW

[odysseus2000]

The trend is toward profits, whether they get there is still unknown.

Regards,

If you read the Aswath Damodaran blog and believe in his valuation methodology, Musk has to pull off the equivalent of a "Royal Flush" to deliver in the long term.

I guess if all you are interested is volatility and the trading opportunities it presents, that matters rather less.

WCW

High beta tech has never traded based on conventional valuations: Amazon e.g. has always been massively over priced on classic valuations as are many other tech shares. Where the share prices goes depends on how well these business execute and is not much related to valuation. However, if any of these business mess up they get heavily sold down and in the by and by can look attractive on valuations. This is usually the point when the magic has gone and the shares are headed further down despite the low valuations.

There are of course exceptions including Apple which trades on a relatively low valuation.

With equities it is useful to know what you are trading in terms of how other investors are likely to react to news, results etc, but even so many traders will not hold a stock through earnings as the risks are great, especially if the stock has run before hand. If it has been heavily sold before results then one can make a case that it is a lottery and all about luck, but most traders still won't own it, perhaps using options instead if they have some conviction.

Regards,

[odysseus2000]

This is a very well argued case for Tesla short by David Einhorn:

https://www.marketfolly.com/2018/10/gre ... apple.html

It is well worth reading and he has clearly studied Tesla extremely closely.

Reading Einhorn one feels he is right, but a well crafted piece of prose is always an opinion former, so one needs to be careful.

He argues that the model 3 is the most unreliable car ever built, quite an achievement if true.

He also argues that Tesla will never sell the $35k model as its too cheap to give the needed margin now that they have discovered that they can not build cars with robots.

He further argues that Musk wants out and wants to be fired such that he can say that if he had remained he could have fixed things.

It is an interesting and plausible case and if correct one can expect Tesla not to make cars more quickly such that the next quarter will be similar to this one in terms of production and for the share price to remain on the sell list.

If instead one sees production gains and lower cost model 3 rolling off the lines one can have more confidence that Einhorn is wrong.

One should also note that Einhorn has lost over 25% so far this year despite Tesla short being his second best winner.

Regards,

[BobbyD]

James Murdoch in line to replace Elon Musk as Tesla chair

James Murdoch has become the favourite to succeed Elon Musk as the chairman of Tesla, which has to replace the electric carmaker’s founder in the role by the middle of next month.

- https://www.ft.com/content/adbcdaf0-cca ... 069bde0956

- https://www.google.co.uk/search?q=James ... e&ie=UTF-8

[Howard]

Some of that may come to happen, and if does it will certainly be as much or more to do with advances in manufacturing technology rather than EV.

Changing the drive chain in a car is significant but it's only a part of the car. The essence of the car is the body, wheels, bearings, brakes, seat, interiors etc. And critically how well those perform over time. Those key skills are ones that existing successful manufacturers have in spades. And it it's likely to take years to get them right and build up a reputation for it for a new kid on the block.

And lets not forget that a vast amount of what goes into a car at present is already outsourced, so I just don't see anything like the disruption you suggest on the horizon.

Peter

Yes, these are great arguments & why there have been few new car companies save for India & China.

But despite all these entrenched advantages Tesla has come from nothing to outsell in the US BMW, Chinese makers are now coming too.

One can certainly expect new consumers in China & India, but few net new in the developed West. So now that Tesla are selling 5,000+ cars per week, some one else will sell 5,000 less in the US.

How has this happened? Legacy auto has got complacent & stupid as exemplified by the VW dieselgate. They have missed the opportunity to lead in electric & are now scrambling to catch up & writing off billions in development off hybrid technology. We are currently at a situation very like the hey day of the UK car makers when they too were complacent and assumed bad practice & lack of innovation would triumph over build quality, reliability & innovation that the Japanese brought to the market.

Regards,

It's going to be interesting to see how Tesla manage the sales of their increased production. There are already rumblings amongst new buyers about the hand-over of their new cars. This used to be one of Tesla's strengths, but now I'm reading that the hand-over process is more rushed. We won't have to wait too long to see if this is just a teething problem or if they have a longer-term problem with their dealers' ability to handle service issues.

Hopefully the quality of the cars made in the tent will be up to standard, but despite prophetic utterances about Tesla wiping the floor with quality manufacturers over the next 5-20 years - the next 6-12 months are going to be very important for their brand image.

regards

Howard

Ody, your comments about the Greenlight Capital report (extract below) suggest you are coming round to the realisation that the Model 3 launch may quickly run into problems. You heard it here first a week ago!!

Are you changing your predictions for the major car manufacturers as quickly?

I'm picking up my new BMW tomorrow and I'd be surprised if Tesla are world beaters when I hand it back in three years!

Greenlight Capital wrote this week: "Meanwhile, the brand is in trouble. The blocking and tackling of the Model 3 rollout is leaving customers unhappy. There have been lots of reports of delivery snafus and poor quality cars. There are anecdotes about TSLA accepting full payment for cars and then not delivering them. There are many stories of cars (even Model S and Model X) in service shops for months for lack of spare parts. With so many new TSLA cars on the road, the problem is overwhelming TSLA’s limited service infrastructure. The Model 3 is the least reliable car on the market."

regards

Howard

[odysseus2000]

Howard
Ody, your comments about the Greenlight Capital report (extract below) suggest you are coming round to the realisation that the Model 3 launch may quickly run into problems. You heard it here first a week ago!!

Are you changing your predictions for the major car manufacturers as quickly?

I'm picking up my new BMW tomorrow and I'd be surprised if Tesla are world beaters when I hand it back in three years!

Greenlight Capital wrote this week: "Meanwhile, the brand is in trouble. The blocking and tackling of the Model 3 rollout is leaving customers unhappy. There have been lots of reports of delivery snafus and poor quality cars. There are anecdotes about TSLA accepting full payment for cars and then not delivering them. There are many stories of cars (even Model S and Model X) in service shops for months for lack of spare parts. With so many new TSLA cars on the road, the problem is overwhelming TSLA’s limited service infrastructure. The Model 3 is the least reliable car on the market."

regards

Howardre

No, the Greenlight Capital is just one of many views on Tesla.

In the article Greenlight focus on the negatives that are mostly qualitative and difficult to verify. There is so much fake stuff that I have no idea whether the negative stories are like Antenna gate was for Apple, i.e. all media no substance, or real.

Greenlight do not focus on the amazing production, nor the developments of the gigafactory in the US and the new one in China, nor that many earlier predictions were that Tesla would run out of financing years back.

The Greenlight article is well written, but it is very weak when examined in terms of what it says and verifiable reality, i.e. it is the opinion of someone justifying his short position to his investors who are presumably many fewer than they were after he lost them 25% of their money in one of the best markets ever. Greenlight may be eventually proved right but currently they are doing so badly that one would be foolish to take too much heed of them imho.

Good luck with the BMW. One neighbour has one about 2 years old, leased when the Russian sanctions meant they had more cars than they could reasonably sell so he got a good deal. He quite likes it but there have been various issues that needed attention and he has not always had good experiences with BMW service.

Regards,

[dspp]

02000,

I must say that you are now giving out a far more balanced view re Tesla than a year ago. Very much imho of course.

I would buy shares in Space X tomorrow (at the right price of course) as it has so much upside. But not Tesla as it has limited upside. The issue is risk/reward, and Tesla would need to fall about 80% for me to go near it. But it wouldn't survive a 80% fall though.

regards,
dspp

[odysseus2000]

02000,

I must say that you are now giving out a far more balanced view re Tesla than a year ago. Very much imho of course.

I would buy shares in Space X tomorrow (at the right price of course) as it has so much upside. But not Tesla as it has limited upside. The issue is risk/reward, and Tesla would need to fall about 80% for me to go near it. But it wouldn't survive a 80% fall though.

regards,
dspp

One can argue that the easy money has been made in Tesla, although it was not so easy at the time.

The higher valuation adds more risk, but at the same time the achievement of making cars which folk are prepared to buy does currently mitigate some of the risk.

It comes down imho to execution and vision. If Tesla continue to execute and retain the vision to continually improve the product, very like Apple do, I can still see substantial upside. If they can get robot driving to work there is a huge upside there and although many argue that a vision without Lidar can't work I am not sure. After all human drivers have no Lidar and do well, but there is still the ugly shadow of the 10 on average people who will die or be seriously injured on UK roads every day. There are clear problems with the Tesla system as is, but I am not sure if they are intractable to better software and more mapping of the highways. For sure Tesla have the best shadow data in the world to refine and craft their algorithms.

If e.g. Tesla can launch a self driving taxi the upside is huge.

There are many unknowable things too.

Whether the new chairman or chairwoman will be a asset or liability who can say. The right person can multiply Musk's abilities, the wrong kill them. The board have to get this right or suffer

There is also solar city. Will this be brought upto speed and with power walls become an important source of revenue. The results from the Australian battery are very impressive and so I believe there is potential here that is not in the calculus of many shorts. Personally I like the idea of the powerwall although many argue that the grid should be the storage the advantage of electric car with solar panels and storage seems also to not be considered by the shorts.

Legacy auto, especially German motor makers, still look very weak to me, still not really accepting that electric is the way forward despite lots of rhetoric. Whether BMW is an easy short I am not sure and have no intention of playing it so, but if Tesla do power on there will be victims.

Everything about Tesla continually changes with substantial share price volatility and this makes it very hard for most investors and a blessing for traders.

Regards,

[odysseus2000]

Interesting seeking alpha article on the model Y.

If the synergies with the model 3, the dramatic reduction in wiring & the sub $100/kWh are correct this could be a very significant money maker for Tesla:

https://seekingalpha.com/article/421118 ... nt-vehicle

Comparing thus article to the bear case of Greenfield is yet another indication of how difficult it is to know what is going on at Tesla & how to frame investment decisions.

Regards,