Case Study: Buy low, Sell high

[bwilson4web]

Recently, I put in an order for Tesla stock (TSLA) at $265/share. My broker had received a modest withdraw from my 401k and there was supposed to be withholdings tax. But they didn't take it out so I kept the 20% Federal and 2% State in the brokerage account reserve pending filing. I had contacted the broker and they are investigating what happened. Then Friday, I saw a very nice price for TSLA but I didn't put my order in before the market closed because I didn't want to touch the withholdings taxes:

On Saturday, my thinking was I could put in a low bid and if the brokerage decided they needed to send the withholding, now already 45 days late, we could just sell enough stock and problem solved. In effect, playing with the withholding before 2019 when I'll have to pay 2018 taxes but I was too slow. Had I gotten in on Friday, I would have potentially made $305 - $165 ~= $40 profit per share.

There is a silver lining in the volume of shares on Friday. A 'short' seller interested in getting out would see the low price and buy enough to close or reduce their borrowed shares (i.e., a margin account.) Assuming they want to get out, NASDAQ reported there was ~$34 million shorted shares a week ago. But can they resist the temptation to squeeze the 'shorting' teat?

This sudden drop in TSLA price was triggered by the SEC charging Elon and Tesla over the "funding secured." The irony is Elon might have bought more TSLA stock when the price was SEC triggered low and improved his ownership of TSLA ... a back-door way of going private. We need to see the trading volume.

Bob Wilson

 

[bwilson4web]

"Seeking Alpha" is having a change of heart:
https://seekingalpha.com/article/4216113-tesla-far-fast

... The important fundamentals lie in the numbers, and right now, the numbers are finally starting to shift in the bulls' favor. ...​

Looking at a longer-term weekly chart, we can also see we've got a decent amount of accumulation going on. The green weekly bars are nearly twice the size of the largest red selling bars during the same period, and the most recent weekly bar was one of the largest on last week's jump. This is a sign that funds are likely accumulating the stock, and has the potential to be fuel for the stock long term.​

Bob Wilson

 

[Pushmi-Pullyu]

"Seeking Alpha" is having a change of heart:
https://seekingalpha.com/article/4216113-tesla-far-fast

... The important fundamentals lie in the numbers, and right now, the numbers are finally starting to shift in the bulls' favor. ...​

One single blog post doesn't mean much there. There are usually multiple new Tesla-related blog entries (I won't dignify such propaganda pieces by calling them "articles") posted there every day, and there have always been a minority -- maybe 20-25% -- that are pro-Tesla. Last time I actually looked at one, the comments were running even more heavily against Tesla than I remembered; maybe 90% anti-Tesla. In the past, I'd estimate them at about 80% anti. But perhaps that was an unusual day.

Very few indeed of the blog entries at SA appear to be people giving their honest opinions; nearly all are people pushing the short or the long position... pumping or dumping.

 

[bwilson4web]

One single blog post doesn't mean much there.

Good point. I was doing a review and saw this one. I kept waiting for a "neneer neneer" but didn't find it. This could be the blind hog's acorn.

Bob Wilson

 

[bwilson4web]

Rats!

I hate to say this but I’ll have to increase my ‘sell’ order from $420 to $460. There is a realistic probability of reaching $420/share.

Bob Wilson

 

[bwilson4web]

Well I took profits on 20 shares TSLA to diversify with 365 shares KL, gold mining, and I’m fairly confident. If Trump kills the economy, gold will hold value. If things don’t crash, TSLA will be the milk cow.

Bob Wilson

 

[Pushmi-Pullyu]

There is a realistic probability of reaching $420/share.

If so, no doubt some Tesla "longs" will be doing a 4:20 to celebrate. Especially in California, where it's now legal!

 

[bwilson4web]

The good news is I'm close, ~$2k, to my original, $25k, 401k draw even after the withholding tax.

Bob Wilson

 

[bwilson4web]

So this is how the last two months looked:

• KL (gold) - continues to be counter-cyclical on the large scale. I suspect this rise is more the result of wider stock market declines. But I can't rule out KL finding new, high quality gold reserves and their capital investment in improving refining technology.
• TSLA - it looks like the further Tesla is away from a quarterly report, the more effect Tesla skeptics have ... their ability to lie by omission. For example, the "3,000 unsold Teslas" appear to be 3,000 / 60,000 ~= 5% of the Q4 production: 3,000 * $75,000 = $0.225 B. Then you read the Q3 report and find $1.72 B "Finished goods." These were unsold cars and energy products in route to customers.

Bob Wilson

 

[bwilson4web]

For example, the "3,000 unsold Teslas" appear to be 3,000 / 60,000 ~= 5% of the Q4 production: 3,000 * $75,000 = $0.225 B. Then you read the Q3 report and find $1.72 B "Finished goods." These were unsold cars and energy products in route to customers.

Now that we have actuals:

in transit to customers / total sales
(1,010 + 1,897) / 90,700 = 3.2%​

Bob Wilson

 

[David Green]

Recently, I put in an order for Tesla stock (TSLA) at $265/share. My broker had received a modest withdraw from my 401k and there was supposed to be withholdings tax. But they didn't take it out so I kept the 20% Federal and 2% State in the brokerage account reserve pending filing. I had contacted the broker and they are investigating what happened. Then Friday, I saw a very nice price for TSLA but I didn't put my order in before the market closed because I didn't want to touch the withholdings taxes:

On Saturday, my thinking was I could put in a low bid and if the brokerage decided they needed to send the withholding, now already 45 days late, we could just sell enough stock and problem solved. In effect, playing with the withholding before 2019 when I'll have to pay 2018 taxes but I was too slow. Had I gotten in on Friday, I would have potentially made $305 - $165 ~= $40 profit per share.

There is a silver lining in the volume of shares on Friday. A 'short' seller interested in getting out would see the low price and buy enough to close or reduce their borrowed shares (i.e., a margin account.) Assuming they want to get out, NASDAQ reported there was ~$34 million shorted shares a week ago. But can they resist the temptation to squeeze the 'shorting' teat?

This sudden drop in TSLA price was triggered by the SEC charging Elon and Tesla over the "funding secured." The irony is Elon might have bought more TSLA stock when the price was SEC triggered low and improved his ownership of TSLA ... a back-door way of going private. We need to see the trading volume.

Bob Wilson

I noticed there have not been any updates recently on this "Case Study", how is it working out? I bought NIO on IPO for $6.50, and sold the next day at $12.80, Bought again last week at 4.90, and rock and rolling again... Oh, and my TSLA short trades netted over 20% each last year, early this year, 3X, and that is after fees. I am not short now, too bad, shorts making a killing today.. My $100K I-Pace fund has grown to $250K in less than a year, and that is after I had to pay 40K in taxes out of it in January. I guess I should do a case study in buy right, and sell right.

 

[bwilson4web]

I noticed there have not been any updates recently on this "Case Study", how is it working out?

So far, no problem. According to my Vanguard brokerage account, "Unrealized gain/loss – $282.02". I just appreciate how whether SHORT or LONG, we both buy low and sell high. The only difference is whether borrowing is involved.

Bob Wilson

 

[David Green]

So far, no problem. According to my Vanguard brokerage account, "Unrealized gain/loss – $282.02". I just appreciate how whether SHORT or LONG, we both buy low and sell high. The only difference is whether borrowing is involved.

Bob Wilson

Wow, you are really setting up to be rich in the future, keep us up to speed on your progress the next couple weeks, things seem to be getting very interesting. Remember when I predicted Toyota would buy Panasonic? been following that news? Panasonic says no more investment for Tesla... Like I said, it's getting interesting.

 

[bwilson4web]

Wow, you are really setting up to be rich in the future, keep us up to speed on your progress the next couple weeks, things seem to be getting very interesting. Remember when I predicted Toyota would buy Panasonic? been following that news? Panasonic says no more investment for Tesla... Like I said, it's getting interesting.

No problem. I've got my sell option working and we'll see what happens. As we both know, the Tesla Q1 report comes out April 24 and there is a review of the next generation AutoPilot. Don't forget, I bought a Model 3 about two weeks ago.<grins>

I really don't remember your "Panasonic" prediction since the purchase of Maxwell looks to be a better technology. Elon and Tesla are a vertically integrated company and batteries remains an important sticking point. Frankly, I don't see Panasonic's battery technology as having long legs compared to Maxwell.

Bob Wilson

 

[David Green]

No problem. I've got my sell option working and we'll see what happens. As we both know, the Tesla Q1 report comes out April 24 and there is a review of the next generation AutoPilot. Don't forget, I bought a Model 3 about two weeks ago.<grins>

I really don't remember your "Panasonic" prediction since the purchase of Maxwell looks to be a better technology. Elon and Tesla are a vertically integrated company and batteries remains an important sticking point. Frankly, I don't see Panasonic's battery technology as having long legs compared to Maxwell.

Bob Wilson

The case study was Buy Low -Sell High? it seems like you have bought high, and held on too long? Too bad, TSLA is dragging down your KL investments.

Tesla has not acquired Maxwell yet. They are still going through due diligence according to the TSLA SEC filings the can keeps getting kicked down the road with extension after extension. As for the Maxwell tech, the value remains to be seen, but Tesla and Panasonic have invested $4.5B into 2170 production that I do not think they are going to walk away from anytime soon as neither company has netted a dime of net earnings off that investment. Tesla has been ramping 2170 production since late 2015, and still struggling to get past 23 GWH/y. You think they will acquire Maxwell, and scale the product for production, and manufacture it in volume anytime soon? Tesla has never shown any ability to scale a product quickly, or efficiently.

 

[Pushmi-Pullyu]

You think they will acquire Maxwell, and scale the product for production, and manufacture it in volume anytime soon? Tesla has never shown any ability to scale a product quickly, or efficiently.

There is probably some truth to the latter part of your assertion, but it's up to Panasonic to put Maxwell's tech into production at Gigafactory 1. Not Tesla.

And if Panasonic really has put a temporary hold on ramping up cell production (or making other significant investments) at Gigafactory 1, then I certainly wouldn't blame them, since according to reports, Panasonic hasn't made any profit at all in their investment in Gigafactory 1. I'm certainly in favor of Tesla controlling its costs, but there's the Biblical adage about "Bind not the mouths of the kine that tread the grain." Perhaps Tesla needs to re-write its contract with Pansonic to share some of its profits? (And don't bother to tell us that Tesla doesn't make any, Mr. Green. We know better than to swallow your oft-repeated bull pucky.)

 

[bwilson4web]

The case study was Buy Low -Sell High? it seems like you have bought high, and held on too long? Too bad, TSLA is dragging down your KL investments.

Only when sold. But then the SHORTs have a problem with low TSLA prices too. It covers the margin but there is no profit until the price goes up.

Tesla has not acquired Maxwell yet. They are still going through due diligence according to the TSLA SEC filings the can keeps getting kicked down the road with extension after extension.

Ever buy a house? I'm less interested in the mechanics of the sale until the April 24 report. The big news will be a future announcements of setting up a 10 GWH/yr, Maxwell Technology battery line.

As for the Maxwell tech, the value remains to be seen, but Tesla and Panasonic have invested $4.5B into 2170 production that I do not think they are going to walk away from anytime soon as neither company has netted a dime of net earnings off that investment.

Sounds like time for Tesla to make some changes in their battery supplier. Sounds good to me. But you may be inaccurate about profit as my understanding is Tesla had profits in Q3 and Q4 2018. Did you read those financial reports that are filed with the SEC? I did.

Tesla has been ramping 2170 production since late 2015, and still struggling to get past 23 GWH/y. You think they will acquire Maxwell, and scale the product for production, and manufacture it in volume anytime soon? Tesla has never shown any ability to scale a product quickly, or efficiently.

Sounds like a good plan if the existing Panasonic product has failed to meet requirements. The only thing worse would be to do nothing. I suspect we'll have more accurate data in the Tesla April 24 Q1 2019 report than anonymous Internet postings.

Bob Wilson

 

[bwilson4web]

There is probably some truth to the latter part of your assertion, but it's up to Panasonic to put Maxwell's tech into production at Gigafactory 1. Not Tesla.

When I first checked the Maxwell web site, they were selling their battery technology. I don't see why Tesla is incapable of making their own battery assembly line. After all, Elon's SpaceX just launched:

That is not a Russian rocket that they refused to sell to Elon.

As for other business negotiations with Panasonic, we've only read 'press releases.' An interested observer, I prefer to see Maxwell technology get scaled up by Tesla.

One of the secrets of vertical integration is control of the whole system from source to end product. Elon has been quite happy to expand both ends and no one has filed anything to successfully stop it. Certainly Alabama failed to keep me from buying our Standard Range Plus Model 3 (SRM3+).

Bob Wilson

 

[Pushmi-Pullyu]

When I first checked the Maxwell web site, they were selling their battery technology. I don't see why Tesla is incapable of making their own battery assembly line.

We know, from many reports, that Panasonic jealously guards its secrets and its work space inside Gigafactory 1. I don't think Tesla can duplicate what Panasonic is doing either easily or well. Also, surely Panasonic's contracts with Tesla specify that Tesla won't try to copy their processes? In fact, isn't it likely that Panasonic's contracts with Tesla specifically bar Tesla from making its own battery cells in more than test sample batches?

Regardless, I doubt Tesla wants to get into the business of actually manufacturing electrochemical battery cells. Panasonic has the expertise to do that, and Panasonic must spend a lot of R&D money on improving their chemistry and manufacturing processes year-on-year. Why would Tesla want to take on that added burden and cost?

* * * * *

On further reflection, my guess is that Elon's rather public complaint about Panasonic being a bottleneck for Tesla production is the same sort of thing he did in past years, trying to pressure Panasonic into ramping up production in its supply for Tesla by publicly courting Samsung as a second supplier.

Here's my opinion -- note opinion, not observation or fact -- of what's going on: Panasonic has fulfilled its contract for expanding production capacity at Gigafactory 1, and has reached the 35 MWh of capacity that it contracted for, and was supposed to complete by 2020. It's completed that early, so now quite properly isn't willing to expand capacity any more at this time. And that should be more than sufficient for Tesla's needs, since Tesla's production estimate for this year (correct me if I'm wrong here) tops at 400k cars, but the 35 GWh of batteries per year that Panasonic says it can currently make is what Tesla said it in past years that it needed for 500k cars. So why would Panasonic need to expand its production more at this time?

My guess is that the real situation is that Tesla doesn't like it that it has sometimes been production constrained by Panasonic's 2170 cell supply, and it wants Panasonic to stay well ahead of Tesla's production capacity, so Tesla never again has to worry about that. But I can certainly understand why Panasonic sees things differently. Tesla has been rather erratic in ramping up Model 3 production, which means at times Panasonic has very likely had excess capacity which it paid to build out, but wasn't benefiting Panasonic because its only market for 2170 cells is Tesla buying them.

Also, the original plan was for Tesla to create a market for excess 2170 cells by using them in PowerWalls and PowerPacks. But for some reason, Tesla has done hardly anything to ramp up PowerWall production, and has used non-Panasonic cells for large PowerPack orders. I suspect that from Panasonic's viewpoint, Tesla has failed to live up to that part of the arrangement. In fact, if I was a negotiator for Panasonic, I'd say to Tesla: "We will make no more investment in increasing capacity at Gigafactory 1 until you develop that energy storage market you keep talking about, so we have a market for excess capacity."

I feel confident that Tesla and Panasonic will work out whatever difficulties they're currently having in their partnership. They have both invested billions in Gigafactory 1, and I can't see either of them walking away from that investment.

Posturing by Elon Musk -- assuming that's what's happening here, and again that's just my guess -- isn't going to get him any leverage over Panasonic than it has in the past. I don't know how much that is, but my guess is "not much".

​

 

[David Green]

Only when sold. But then the SHORTs have a problem with low TSLA prices too. It covers the margin but there is no profit until the price goes up.

I easily netted over 20% profit all 3 times I shorted TSLA, that is after broker fees, which are cheap for me, because I have cash deposited to cover my margin activities.

Ever buy a house? I'm less interested in the mechanics of the sale until the April 24 report. The big news will be a future announcements of setting up a 10 GWH/yr, Maxwell Technology battery line.

I buy and sell real property for a living, did you forget I am a land developer for the last 30 years?

Sounds like time for Tesla to make some changes in their battery supplier. Sounds good to me. But you may be inaccurate about profit as my understanding is Tesla had profits in Q3 and Q4 2018. Did you read those financial reports that are filed with the SEC? I did.

Program profit does not come from a sliver profit in 2 qtrs, its the sum of all earnings-loss since the start of the program.

Sounds like a good plan if the existing Panasonic product has failed to meet requirements. The only thing worse would be to do nothing. I suspect we'll have more accurate data in the Tesla April 24 Q1 2019 report than anonymous Internet postings.

Tesla will be in trouble if they manage to piss off Panasonic, which Elon is working hard to do these days.

Bob Wilson