Author Topic: TSLA - Tesla Motors  (Read 706820 times)

A Dhandho Investor

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Re: TSLA - Tesla Motors
« Reply #3130 on: August 26, 2019, 01:22:06 AM »
Another hit piece aimed at Elon Musk: https://www.vanityfair.com/news/2019/08/how-elon-musk-gambled-tesla-to-save-solarcity

For those who did not have time to read the Walmart lawsuit, this video of a Tesla fan provides a nice summary: https://www.youtube.com/watch?v=8i0looHbgXk


A Dhandho Investor

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Re: TSLA - Tesla Motors
« Reply #3131 on: August 29, 2019, 02:45:59 AM »
Tesla launches its insurance product: https://www.tesla.com/nl_BE/blog/introducing-tesla-insurance?redirect=no

Not sure how rates can be 20 to 30% lower, as I assume Tesla will act as an agent on a policy underwritten by a carrier.

Tesla also specifically mentions that they will not use the data captured from the vehicles for price setting purposes.

Cigarbutt

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Re: TSLA - Tesla Motors
« Reply #3132 on: August 29, 2019, 06:20:01 AM »
Tesla launches its insurance product: https://www.tesla.com/nl_BE/blog/introducing-tesla-insurance?redirect=no

Not sure how rates can be 20 to 30% lower, as I assume Tesla will act as an agent on a policy underwritten by a carrier.

Tesla also specifically mentions that they will not use the data captured from the vehicles for price setting purposes.
The insurance product will be sold through a Markel sub as a fronting agent, which means Tesla have set up the platform to offer the product but the California sub will manage the insurance operations (underwriting, claims management etc) and essentially all the risk will be transferred to others using reinsurance transactions. The operational and financial risk appears to be minimal for Tesla and the premium price should be correlated to others's appetite for the underwriting risk. On a conference call earlier this year, Markel mentioned that they were supplying the "plumbing" allowing risk transfer in this specific California-based arrangement.

This is puzzling in terms of strategy. The product went through the California insurance regulators and it seems that Tesla and its fronting partner will not use data to calibrate insurance policy pricing, which seems like a potential advantage and which is already used by other insurers. The underlying theme seems to be that Tesla feels that the underwriting risk for Teslas is overestimated as the embedded safety features of their cars (including Autopilot) should result in lower actual claims down the road, even if the transition environment will include cars driven by humans for still quite a while. It's a bet on the future with an unclear timeline and perhaps this fits with the territory. Tesla owners may be better drivers and may have better insight when deciding to let the technology drive. 8)

Also though, even if they mention that the safety and technology features on the cars will not impact insurance premiums pricing, I wonder if the insurance claims management department could not use the recorded data around accidents in order to improve their legal cost allocation once an accident has occurred in order to minimize costs from certain claims and to simply accept certain vehicle crashes costs when applicable.

dwy000

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Re: TSLA - Tesla Motors
« Reply #3133 on: August 29, 2019, 06:59:28 AM »
Anecdotal evidence would suggest insurance pricing for Teslas is too high so this seems like a smart move.  I'd love to hear from others but I know when I bought my Tesla 2 months ago my insurance went way up relative to my old car (well naturally!) but also relative to any other new car I would have bought.  For a safe vehicle with low maintenance needs I would think all things being equal, the insurance risk is lower.

Now on the other hand it does go like a bat out of hell so maybe people drive faster.

I would switch in a heartbeat if they offered it in my state.

Cigarbutt

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Re: TSLA - Tesla Motors
« Reply #3134 on: September 06, 2019, 01:36:24 PM »
Concerning the in-house offering of the insurance product, it now appears that Tesla will (eventually) use the data to adjust premiums pricing, subject to regulatory approval.
https://ca.news.yahoo.com/teslas-individual-driver-data-insurance-050634544.html
Interesting.

Gregmal

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Re: TSLA - Tesla Motors
« Reply #3135 on: September 14, 2019, 09:11:23 AM »
Ive been thinking about the best way to put on some trades that make money if the market does get shaky as pundits have been predicting forever. Outside of the debate on much of this thread about how great they are and how revolutionary that stuff is; it isn't contestable that this is a discretionary spend company. They arent making money at the peak of the cycle, and are barely staying solvent(maybe that's arguable, but you get my point). A slow down IMO, one that dries up the capital markets and consumer demand falls off a cliff, would kill Tesla.

Would going as far out as possible on long date puts at maybe a $30 per share or lower strike not be an incredible all around hedge/trade/bet? It seems the outcome here is rather binary. Either Tesla changes the world and is worth $4000 a share, or its going bankrupt. Assessing the allocation from a risk management perspective, I really like the idea of say, buying June 2021 $20 puts for a buck. Thats basically a 15-20x payoff if you're right. Curious if others had evaluated stuff like this.

SHDL

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Re: TSLA - Tesla Motors
« Reply #3136 on: September 14, 2019, 02:23:11 PM »
Ive been thinking about the best way to put on some trades that make money if the market does get shaky as pundits have been predicting forever. Outside of the debate on much of this thread about how great they are and how revolutionary that stuff is; it isn't contestable that this is a discretionary spend company. They arent making money at the peak of the cycle, and are barely staying solvent(maybe that's arguable, but you get my point). A slow down IMO, one that dries up the capital markets and consumer demand falls off a cliff, would kill Tesla.

Would going as far out as possible on long date puts at maybe a $30 per share or lower strike not be an incredible all around hedge/trade/bet? It seems the outcome here is rather binary. Either Tesla changes the world and is worth $4000 a share, or its going bankrupt. Assessing the allocation from a risk management perspective, I really like the idea of say, buying June 2021 $20 puts for a buck. Thats basically a 15-20x payoff if you're right. Curious if others had evaluated stuff like this.

I think that should work as a macro hedge, although I wouldn’t go too big because (a) there is the risk that a certain group of people will just keep funding the company no matter what, and (b) given the how crowded the short trade is it may take longer for the stock price to plunge than one might expect.

Also if you think the underlying stock’s upside potential is limited, you may want to consider pairing the bet with something like a bear call spread. 

Gregmal

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Re: TSLA - Tesla Motors
« Reply #3137 on: September 14, 2019, 02:57:26 PM »
Ive been thinking about the best way to put on some trades that make money if the market does get shaky as pundits have been predicting forever. Outside of the debate on much of this thread about how great they are and how revolutionary that stuff is; it isn't contestable that this is a discretionary spend company. They arent making money at the peak of the cycle, and are barely staying solvent(maybe that's arguable, but you get my point). A slow down IMO, one that dries up the capital markets and consumer demand falls off a cliff, would kill Tesla.

Would going as far out as possible on long date puts at maybe a $30 per share or lower strike not be an incredible all around hedge/trade/bet? It seems the outcome here is rather binary. Either Tesla changes the world and is worth $4000 a share, or its going bankrupt. Assessing the allocation from a risk management perspective, I really like the idea of say, buying June 2021 $20 puts for a buck. Thats basically a 15-20x payoff if you're right. Curious if others had evaluated stuff like this.

I think that should work as a macro hedge, although I wouldn’t go too big because (a) there is the risk that a certain group of people will just keep funding the company no matter what, and (b) given the how crowded the short trade is it may take longer for the stock price to plunge than one might expect.

Also if you think the underlying stock’s upside potential is limited, you may want to consider pairing the bet with something like a bear call spread.

Yea I was looking at the sizing and I mean dedicating a couple percent gross, gets you 2 years or so, that's not terrible IMO. Its just handicapping the correlation between an economic seize up, and Tesla going bust. I think its very close to a certainty, but I could obviously be wrong. Are there any realistic scenarios where there is an in between?

I say this, because we all know that being right about something(say predicting a housing crash) and making money on it are not mutually exclusive. Look at jerk of Peter Schiff(the gold is going to $20,000 guy, not the pencil neck politician whining about helicopter noise). Guy supposedly "called" the subprime crisis, and still lost like 80% for his investors. Ive got a few things Im working on, but this one is one of the more promising and unique. Its not really a "Tesla is going to 0 bet either", although that could work as well even if the economy doesn't tank. Its a "how do I most efficiently hedge an economic slowdown/market crash"....

SHDL

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Re: TSLA - Tesla Motors
« Reply #3138 on: September 15, 2019, 06:42:35 AM »
Ive been thinking about the best way to put on some trades that make money if the market does get shaky as pundits have been predicting forever. Outside of the debate on much of this thread about how great they are and how revolutionary that stuff is; it isn't contestable that this is a discretionary spend company. They arent making money at the peak of the cycle, and are barely staying solvent(maybe that's arguable, but you get my point). A slow down IMO, one that dries up the capital markets and consumer demand falls off a cliff, would kill Tesla.

Would going as far out as possible on long date puts at maybe a $30 per share or lower strike not be an incredible all around hedge/trade/bet? It seems the outcome here is rather binary. Either Tesla changes the world and is worth $4000 a share, or its going bankrupt. Assessing the allocation from a risk management perspective, I really like the idea of say, buying June 2021 $20 puts for a buck. Thats basically a 15-20x payoff if you're right. Curious if others had evaluated stuff like this.

I think that should work as a macro hedge, although I wouldn’t go too big because (a) there is the risk that a certain group of people will just keep funding the company no matter what, and (b) given the how crowded the short trade is it may take longer for the stock price to plunge than one might expect.

Also if you think the underlying stock’s upside potential is limited, you may want to consider pairing the bet with something like a bear call spread.

Yea I was looking at the sizing and I mean dedicating a couple percent gross, gets you 2 years or so, that's not terrible IMO. Its just handicapping the correlation between an economic seize up, and Tesla going bust. I think its very close to a certainty, but I could obviously be wrong. Are there any realistic scenarios where there is an in between?

I say this, because we all know that being right about something(say predicting a housing crash) and making money on it are not mutually exclusive. Look at jerk of Peter Schiff(the gold is going to $20,000 guy, not the pencil neck politician whining about helicopter noise). Guy supposedly "called" the subprime crisis, and still lost like 80% for his investors. Ive got a few things Im working on, but this one is one of the more promising and unique. Its not really a "Tesla is going to 0 bet either", although that could work as well even if the economy doesn't tank. Its a "how do I most efficiently hedge an economic slowdown/market crash"....

That sounds about right.  For example if you think we are going to get a recession by then with a > 30% probability and that if we do the company is going to go bankrupt with a > 50% probability, then we have a > 15% probability that those puts are worth 20.  So the expected value is > 3 vs a price of 1, which for most investors should easily clear their expected return hurdle.  There is a real risk of total loss which makes it difficult to take a big swing, but a low single digit % allocation isn’t that hard to justify.

My reading of various historical accounts is that quite a few people have lost money making bearish macro bets despite being “right” about their forecasts by shorting equities too aggressively and then getting whipsawed.  Buying OTM puts in moderation when they’re cheap should be a good way to avoid that mistake.  Another strategy that has worked well in the past is to be long Treasury bonds, but I’m not so sure if that is a great idea this time given how low interest rates already are and how inflation is starting to heat up.

UK

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Re: TSLA - Tesla Motors
« Reply #3139 on: September 15, 2019, 10:00:02 PM »
Maybe quite realistic scenario is that somebody eventually could buy them? I think some time ago they had talks with Softbank, wouldn't it be similar, or even more understandable, than We at almost 50B?
« Last Edit: September 16, 2019, 12:07:32 AM by UK »