Aug 17 2020 - Tesla Investors Are Flying Blind In China

Summary

MaxedOutMama joins me again to take a close look at Tesla’s Q2 results in China.

Alas, there's precious little in Tesla's reporting to guide us because the latest quarterly report continues to eschew detailed segment reporting.

The omission is disappointing. We explain why Tesla's failure to furnish segment reporting is at odds with standards promulgated by the Financial Accounting Standards Board.

MOM has pored through what evidence we have, and it appears Tesla Shanghai's Q2 results were far from stellar. Indeed, it appears there was a big cash hole.

Finally, we'll hear from the foremost authority on the Chinese automotive market on Tesla in China. And glory be, his views line up with those of MOM and me.

By most accounts, China was the bright spot for Tesla (TSLA) in Q2. Quarterly revenues and deliveries were off sharply in the United States and the rest of the world, but China made up for some of the revenue decline and more than all of the delivery decline.

In the business press and among analysts, the received wisdom is that Tesla is succeeding smashingly in China. Let me offer one example among many: A recent Autoline This Week discussion featuring Michael Dunne of ZoZo Go, whom Autoline's host, John McElroy, introduced as the foremost authority on the Chinese automotive industry.

Dunne noted that sales in China by GM, Ford, and FCA have declined dramatically in recent years, prompting this comment (at about 6:00) from Jamie Butters, the Chief Content Officer at Automotive News:

The Detroit Three have been struggling but Tesla is doing great. They got the right to own their factory outright. They've gotten a lot of support. And Elon Musk has been raving about China's entrepreneurial culture, and he feels like Silicon Valley's gotten fat, dumb, and happy already and China is where it's at.

I want to come back to this (valuable) Autoline discussion later, but for now cite it simply to note how even someone as knowledgeable as Jamie Butters readily assumes Tesla is "doing great" in China.

The truth is there's no way to know whether, in its Chinese production and sales, Tesla is doing great, doing terribly, or something in between. And the reason there's no way to know is that Tesla, despite accounting standards that require detailed segment reporting, has declined to furnish such reporting.

Here, with most of the heavy lifting done by my sometime collaborator, MaxedOutMama (to whom I refer as MOM), I will offer in Part I a summary of the key agreements governing Tesla's operations in China, and of the implications that logically follow from those agreements.

In Part II, I will review how Tesla has repeatedly stated that both its capital expenses and its production costs are materially lower at its Shanghai plant relative to its Fremont plant.

In Part III, I will detail how, in view of these material cost differences, standards promulgated by the Financial Accounting Standards Board (or FASB) cry out for Tesla to furnish meaningful segment reporting, and how Tesla has signally failed to do so.

In Part IV, I will point to evidence from recent quarterly filings suggesting Tesla has run into significant financial difficulties in China and is facing weak demand and shrinking margins.

In Part V, I will return to the Autoline interview with Michael Dunne. His views on Tesla in China line up closely with those of MOM and me.

I. Tesla's Precarious China Posture

Tesla's agreements with the Chinese government and Chinese banks are poorly understood. MOM and I have written at length about the agreements and their implications (here and here) and offer this condensed summary. If you are familiar with this background, feel free to skip ahead to Part II.

• The Chinese government has a long-standing goal of replacing imported technology with domestically-produced technology.

• Consistent with that goal, the Chinese government under a so-called Grant Contract gave a Tesla subsidiary – Tesla (Shanghai) Co., Ltd. (herein, Tesla Shanghai) – the right to build an automotive factory on a 214-acre site and to own and operate it without any Chinese co-owner.

• Tesla, supporting the Chinese government’s goal of becoming an EV technology leader, earlier this year established a new research and development center in Shanghai which, according to a posting by Tesla at its official Chinese social media account, “will enable (Musk) to fulfill his vision of not only making vehicles in China, but designing them there.” Indeed, there is recent news that Tesla is now designing a new vehicle in China for the global market.

• Near the time of the Grant Contract, the Chinese government arranged for a generous financing package for Tesla Shanghai from state-controlled banks. The financing, which was re-arranged last December, includes a factory loan of up to .26 billion with a five-year term and a 5 million working capital loan with a one-year term.

• Tesla Shanghai sells its production through another Tesla subsidiary, Tesla (Beijing) Co, Ltd. (herein, Tesla Beijing), which also imports into China Fremont-made vehicles. Last year, the Chinese government also arranged financing for Tesla Beijing: An RMB 5 billion (0 million) loan facility, secured by the cars in Tesla Shanghai’s inventory and by funds on deposit in a collection account.

• Under the Grant Contract, the Chinese government reserves the right to revoke the 50-year land grant if there should arise vaguely defined “special circumstances” arising from the “public interest.”

• Elon Musk gave a propaganda boost to the Chinese government at last year’s World Artificial Intelligence Conference in Shanghai, where he announced that China “is the future.” More recently, Musk voiced high praise for China, with deprecation for the U.S., in an interview with Automotive News:

China rocks, in my opinion. The energy in China is great. People there – there’s like a lot of smart, hard-working people. And they’re really – they’re not entitled, they’re not complacent, whereas I see in the United States increasingly much more complacency and entitlement, especially in places like the Bay Area, and L.A., and New York.

• Predictably, Musk’s comments attracted favorable commentary in the closely-controlled Chinese press:

• The Chinese government has frequently reciprocated Musk's praise, most recently lauding Tesla in a transparent propaganda pitch aimed at U.S. policies that increasingly question China’s theft of intellectual property and oppression of its Uighur and other mostly Muslim minorities. The Chinese ambassador's comments came only a week after the U.S. accused China of sponsoring criminal hackers targeting coronavirus vaccine research.

• Under the terms of the Tesla Shanghai loan agreements, until all loans have been fully repaid, no funds can leave the control accounts at Chinese banks except for expenditures related to Tesla’s Shanghai operations. In other words, even if Tesla were to be cash flow positive in Shanghai, the cash would be unavailable to Tesla’s operations throughout the rest of the world for years to come.

• The land grant requires Tesla Shanghai to achieve a level of total annual sales of RMB 75 billion (.5 billion) by the end of 2023; failing that, Tesla would forfeit the factory. Depending upon what assumption one makes about average sales price, the currency threshold translates to sales of between 250,000 to 300,000 cars per year. (Or, somewhat fewer if, as MOM expects, Tesla Shanghai satisfies some of the requirement by becoming a major parts supplier to the Brandenburg factory.)

• It's highly unlikely Tesla Shanghai can satisfy its annual sales requirement with sales only in China. As Tesla itself has acknowledged, it will be exporting made in China cars to markets in Asia and Australia now served by Fremont.

• In sum, Tesla’s Shanghai factory is satisfying Chinese demand formerly filled by Fremont. It will soon be satisfying other Asian and Australian demand now filled by Fremont. This, at a time when Tesla’s U.S. demand has flattened and European demand is shrinking. The Fremont plant, already operating well below its annual production capacity of 490,000, will become further underutilized while Tesla is prohibited from repatriating any excess cash from its Chinese operations.

II. Tesla's Material Cost Advantages in China

In its Q3 2019 quarterly update, Tesla stated that its Shanghai factory was approximately 65% less expensive to build than its Model 3 production system in the U.S. In other words, the capital expenditure per unit of capacity in Shanghai was 65% lower than the capital expenditure per unit of capacity in Fremont.

This dramatically-reduced capital expense, and consequently lower depreciation per unit of production, obviously creates economic characteristics for Shanghai that are materially different from those at Fremont.

The different economic characteristics are further heightened by Tesla's far lower production costs in China. Both labor and parts are far less costly, as Tesla has moved rapidly toward local suppliers. In the words of Chief Financial Officer Kirkhorn during the Q1 earnings call in April, not only has Tesla achieved a "capex dream," but:

[Y]ou can run down the entire list of COGS (costs of goods sold) between labor cost, material cost due to localization, opening up suppliers that would not have made economic sense from the states.

Localizing the supply chain flows into inbound logistics and outbound logistics costs, as well, so we're not shipping cars from California over to China. And then that has a corresponding savings on our lower import related costs. And then there is a slide in the shareholder letter that shows the layout comparison between our Fremont facility here in California and also the Model 3 factory in China, and the simplification in terms of the flow is pretty evident from that layout and that cascades itself into all sorts of savings for the operations of the facility.

Elon Musk expanded further on this during the most recent earnings call:

[T]he thing that's really helping is like there were previously a ton of parts that were made in other parts of the world that were being shipped to Shanghai from every part of the world.

And just locally sourcing those components makes a massive difference to the cost of the vehicle. And, I mean, the proportion of local sourcing has literally been rising at like 5% to 10% a month, from 40 - it was like 40% at the beginning of this year, something like that, it will be 80% by the end of this year, maybe more.

Combine the per unit of production capital expenditure savings with the litany of cost reductions pointed to by Kirkhorn and the "massive" savings on locally produced parts, and it's obvious that Tesla Shanghai has materially different economic characteristics than Tesla Fremont.

(Elon Musk with Chinese Premier Li Keqiang, whom he told, "I love China and want to come here more often." Photo credit: Mark Schiefelbein/AFP/Getty Images)

III. FASB and the Importance of Segment Reporting

The Financial Accounting Standards Board (or FASB) is an independent organization that establishes financial accounting and reporting standards for (among other types of business firms) public companies required to follow Generally Accepted Accounting Principles. Its standards are recognized as definitive by the Securities and Exchange Commission, and CPAs in the United States respect its authority.

FASB promulgates detailed guidance in its so-called Accounting Standards Codifications (or ASCs). Among those ASCs is ASC 280, dedicated to segment reporting. ASC 280’s stated objective is:

To provide information about the different types of business activities in which a public entity engages and the different economic environments in which it operates to help users of financial statements do all of the following:

a. Better understand the public entity’s performance

b. Better assess its prospects for future net cash flows

c. Make more informed judgments about the public entity as a whole.

(emphasis added)

What constitutes an operating segment? Per ASC 280 10 50-1, an operating segment has the following characteristics: (1) It engages in activities from which it earns revenues and incurs expenses, (2) it has operating results regularly reviewed by the company's chief operating decision maker, and (3) it has discrete financial information available.

Tesla's Chinese operations plainly meet the definition of an operating segment, so the next question is: Under what circumstances is the company required to report separately information about that segment? The answer, found in ASC 280 50-10, is when the assets, profit or loss, or revenue of that segment meet the quantitative threshold set forth in ASC 280 10 50-12, which is 10%.

Tesla's revenues from its China operations in Q2 totaled .4 billion, which is more than 23% of its total revenues of just over billion. So, the separate reporting requirement is triggered.

What would segment reporting complying with ASC 280 look like? As Twitter poster Motorhead informs us, here's how Toyota (NYSE:TM) does it with its quarterly update:

(Note: The operating income by region does not include imports from Japan; for instance, North American operating income is simply the income from production and leasing in North America, excluding, among other things, Lexus imports.)

(The Toyota slide on its Q2 Chinese operations)

Toyota's quarterly and annual SEC filings go even further, with exquisite detail about production, deliveries, revenues, foreign exchange transactions, depreciation, research and development costs, and capital expenditures for each of Japan, North America, Europe, Asia, and Other (here's the latest).

Other large OEMs also offer detailed segment reporting. For instance, take a look at Volkswagen's (OTCPK:VLKAF) half-year report.

So, what does Tesla offer? Behold the sum total of segment reporting in the latest quarterly report, which is a breakdown of revenue:

This revenue breakdown is the only breakdown. Tesla reports none of the other detail that Toyota and other OEMs offer. Moreover, the "Other" category, which accounts for a quarter of Tesla's revenues, includes no further breakdown by geography.

Obviously, Tesla is aggregating its results from Fremont and Shanghai operations rather than segmenting them. Under what circumstances do FASB standards allow aggregation? When the different segments are similar in all of the following areas:

1. The nature of the products and services;
2. The nature of the production processes;
3. The type or class of customer for their products and services;
4. The methods used to distribute their products or provide their services; and
5. If applicable, the nature of the regulatory environment, for example, banking, insurance, or public utilities.

(See ASC 280-10, paragraphs 55-7A through 55-7C; see also Example 2, Cases A and B, ASC 280-10, paragraphs 55-33 through 55-36.)

Focusing only on the first item, it's evident Tesla's Shanghai operations don't meet the criteria for aggregation. Given the vast differences in capital expenditure per unit of production capacity and in COGS, including the heavy reliance on Chinese-made parts, the production processes in Shanghai differ materially from those in Fremont, with the divergence expected to increase (per Musk's statement about moving to 80% China-sourced parts by year end).

The type or class of customer is also different in China. The Shanghai cost structure needs to be lower because Chinese incomes are generally lower. CFO Kirkhorn acknowledged as much last January when he cautioned that the made-in-China Model 3 SR+ needs to be priced considerably lower than the same model made in Fremont.

Tesla expects to double its annual Shanghai plant capacity to 400,000 units by next year, with the introduction of the made in China Model Y. Both the existing and the planned capacity imply Tesla must approach a far larger Chinese customer base than it has in the past. The nature of the Chinese market (subsidy dependent, price sensitive, and intensely competitive) indicates such growth will be very difficult to accomplish in the near term.

There was jubilation among Tesla bulls when governmental reports indicated 15,000 June deliveries, which on an annual basis would equate to 180,000. Tesla, it seemed, was headed in the right direction. The number in July, however, dropped 24%, to 11,546.

Using the rule of thumb that minimum capacity utilization of 75% is required for profitable operation of a car factory, Tesla would need to sell 300,000 made-in-China vehicles next year to achieve profitability in Shanghai. That's a tall order given the sales of "New Energy Vehicle" (or NEV) in China during recent years. Last year, there were 1,177,421 NEV sales. Many of these were plug-in hybrids, a segment in which Tesla has no offerings. Ignoring that fact, Tesla would need to capture 25% of the NEV market to reach 300,000 in annual vehicle sales. This further underscores that Tesla would need to appeal to a markedly different type of customer in China than it does in the rest of the world.

Besides significantly different production processes and type of customer, there's the overwhelming fact that no Tesla Shanghai revenues can leave China. Those revenues are altogether unavailable to satisfy the needs of Rest of Tesla.

Put it all together and there's simply no way any investor can intelligently assess the performance and prospects of Tesla's China operations without detailed segment reporting on China. All the reporters and analysts claiming Tesla is succeeding in China are doing so based on faith, not facts, because Tesla has not offered nearly enough detail to justify any such claim.

What's Tesla's justification for aggregation rather than segment reporting? It appears to be Kirkhorn's repeated insistence that gross margins in Shanghai will be similar to those in Fremont. But the FASB accounting standards are clear that, if the production processes or type of customer is different, then achieving the same gross margins (in Tesla's case, by selling the Shanghai-made cars for less) does not obviate the requirement for detailed segment reporting.

IV. In Q2, Were Things Shaky in Shanghai?

Although Tesla's failure to furnish detailed segment reporting impedes our ability to draw any firm conclusions, there's evidence to suggest Tesla's Q2 results in Shanghai were not impressive.

A. Tesla's China Loans Increased by 6 Million

MOM gathered the loan data from the 2019 annual report and the two most recent quarterly reports, and produced this compilation:

As shown, Tesla Shanghai’s total outstanding debt increased by 6 million in Q2. Its current indebtedness – that is, debt coming due over the next year – increased by 7 million. We know from the factory loan agreement that amortization of principal under that facility does not begin until December 2022. Thus, none of the principal outstanding under that facility is classified as current.

That means Tesla Shanghai drew down million from the factory loan agreement, with the other 7 million coming from loan facilities that mature within a year. The working capital line instituted last December has only 5 million of capacity, and most of that was probably already drawn by the end of Q1. So, the lion’s share of the 7 million came from somewhere else.

There are two possible sources: First, Tesla Beijing’s 0 million revolving loan facility. Under that line, Tesla Beijing has the right to nominate another Tesla affiliate to receive credit. Advances under the line are due six months after they are made.

B. The Big Q2 Surprise: An Emergency Loan from ICBC

However, the Tesla Beijing line apparently was insufficient, because in May, Tesla secured yet another Chinese loan facility: A revolving working capital line for RMB 4 billion (0 million) from Industrial and Commercial Bank of Commerce (or ICBC), one of the four members of the lending consortium for the two December facilities.

The ICBC line substantially exceeds the 5 million in Tesla Shanghai’s working capital line from December. Even more striking than its large size is the fact that the ICBC revolving line is wholly unsecured. Tesla Shanghai simply has no assets not already tied down by the factory loan and the earlier working capital loan, so the loan had to be either unsecured or not made at all.

ICBC is a so-called policy bank; it makes loans other banks won’t make when the making of the loan is important to Chinese governmental policies. Under the circumstances, it seems a safe surmise that the Chinese government directed ICBC to provide the 0 million line.

Perhaps significantly, the ICBC line was put in place near the time Robin Ren, who had been hailed as crucial to Tesla Shanghai’s ability to line up the land grant and factory financing, abruptly departed the company. It's dated the same date (May 7) that Tesla idled its Shanghai plant for several days, claiming it was conducting maintenance work.

C. Was Tesla's Cash Growing Tight?

The ICBC line presents yet more mysteries. The permitted uses under the line are identical with those in the .26 billion factory loan. Tesla Shanghai has plenty of unused capacity under that factory loan. So, why, instead of drawing on the factory loan, did Tesla Shanghai add a third loan line to its stack, and why did ICBC agree to take on a wholly unsecured credit obligation?

The answer, very possibly, is found in the factory loan line requirement that in order to draw under the facility, Tesla Shanghai must contribute some of its own capital. The agreement requires a 2 to 8 ratio. So, for example, to borrow million, Tesla Shanghai must contribute million.

Here, we arrive at what MOM believes is a misapprehension held by many Tesla skeptics who trace the ascent in foreign currency increase from year end 2019 (.26 billion equivalent) to March 31, 2020 (.05 billion) to June 30, 2020 (.60 billion), and conclude the dramatic rise is attributable to China.

Regarding the 2019 year-end figure, MOM notes that the registered capital of Tesla’s Chinese entities would account for most of it. (She observes further that Tesla Shanghai’s registered capital is 7 million, that it like other Tesla subsidiaries is barred from reducing that capital, and that Tesla characterizes none of such frozen registered capital as “restricted cash” even though, in economic reality, it is restricted). Since year-end 2019, MOM believes most of the increase is attributable to euros, not yuan, and that the yuan continues to precede Euros and Canadian Dollars in the quarterly reports simply because Tesla has not revised the order since the 2019 10-K.

Is it logical to think that, if Tesla had excess cash in China, ICBC would have made a large loan, and one that is, moreover, unsecured? No, it would not seem to be logical.

So, how to explain the emergency ICBC loan facility? MOM surmises Tesla Beijing ran out of capacity on its line, and Tesla ex-China was unwilling to pay in more capital to allow further draws under the factory loan line. There's an undeniable logic to this: Had Tesla ex-China been willing to furnish the capital, the funds Tesla Shanghai needed would have been advanced under a facility where repayment is required in five years rather than one year.

Why did Tesla Shanghai require the credit infusion? Was the infusion required to expand production? It would appear not. Per the Q2 quarterly report, Tesla Shanghai made its first draw under the new line in June. Its production in June – 11,000 – cars, was lower than May’s production.

Was the infusion required to import battery packs? Plainly not. In the first half of this year, China-based LG Chem supplied Tesla Shanghai with 90% of its batteries.

We are left with the surmise that Tesla’s Chinese operations operated at a significant cash flow deficit in Q2. (Recall that cash flow positive is a much less rigorous measure that GAAP profitability, as cash flow positive gathers in deferred revenue, sales return allowances, warranty reserves, and other items that, while cash, don’t figure into profitability.)

D. How Big Was Tesla China's Q2 Cash Deficit?

Let’s try to quantify the deficit.

In Q2, Tesla reported capital expenditures of 5 million overall. Surely, a large part of that was for Brandenburg and Fremont. MOM estimates that, at most, 0 million was for Shanghai. Recalling that Tesla’s long-term Chinese debt grew by million, that leaves 1 million to be funded from other sources.

Let’s make three extreme assumptions: (1) 0 million of the Q2 capex was for Shanghai; (2) Tesla shifted 1 million of its Q2 cap ex spending from the five-year factory loan to the new short-term facility; and (3) Tesla spent none of its own cash on the factory expansion. That would still leave a Q2 cash deficit of 6 million. Relax any of those three assumptions and the Q2 cash deficit grows.

The entire exercise has MOM shaking her head. How could Tesla’s China operations have run so far in the red in Q2? It’s almost as if, during Q2, Tesla Shanghai suddenly discovered bills that had arrived in Q1 but didn't figure in the Q1 financials. Of course, that cannot be the case, but it’s difficult to construct a scenario under which Tesla was losing more than ,000 per car produced.

E. We Just Don't Know

What MOM and I have written in this Part IV is tentative, exploratory, and speculative. Without detailed segment reporting, we are left to read tea leaves. In defense of our speculation here, I'm confident it's more fact based than the blithe assumptions and assertions by so many others that things are going swimmingly for Tesla in Shanghai.

V. In Shanghai, Tesla Is Beholden to the Communist Chinese Party

Let's now return to the Autoline interview. We left it at the point where Jamie Butters was insisting that, in contrast to the Detroit Big Three, Tesla was succeeding marvelously in China.

Here's the response of Michael Dunne:

You know what, Jamie? China set out to be the global dominator in future electric vehicles. The production base, the R&D base; they already have the biggest battery maker. Tesla plays into that Master Plan. Bring Tesla in, brings Tesla's supply base in. And, yes, we'll let them own 100%.

But they're... they're... The Chinese also have an expression. Think of the Chinese economy as a birdcage. The Communist Party's in charge of keeping the birds inside the cage. You can fly around as much as you want; you're free to fly around inside that birdcage and do what you like.

But, ultimately, everything rolls up to the Communist Party. And that's where Tesla finds itself. It's gotten off to a great start; 50,000 sales in the first half, on track for 100,000 for this entire year. But keep in mind, ultimately Tesla is beholden to the good graces of the Chinese government - the Chinese Communist Party. That's what's going on.

Where have you heard all that before? From MOM and me, that's where. I must say, it's gratifying to see that the world's foremost expert on the Chinese automotive market agrees.

Now, if only the U.S. automotive writers and Tesla analysts would perk up and pay attention.

A Final Note

I grow weary of writing it, and you grow weary of reading it, but shorting Tesla, or any other seemingly obvious short, in the present market, is hugely risky, and I continue to strongly discourage it.

In my lifetime, I have never seen equity markets more detached from actual economic conditions. I have never seen such reckless fiscal and monetary policy. I have never seen trading more driven by forced index fund buying or more congested by retail investors who were utterly uninformed about, and indifferent to, even the rudiments of finance. I have never felt the social fabric so dangerously close to fraying.

When to short Tesla? Perhaps when, as Marc Cohodes, says, "the jaguar has fallen from the tree?" Worth a listen is the TC’s Chartcast with Cohodes that treats with the perils and strain of short selling.

 

Mike Smitka All other global OEMs have local partners, with their own local backers and ties. They get 50% of profits, and most fare poorly with their own "house" brands. (See recent news on the effect exit of Huachen 华晨, a partner of BMW, from making and selling their own "house" brand.) Since most of the global OEMs were immensely profitable, that 50% was quite OK for sitting back and doing not much of anything except desultory efforts to sell their own brands. But these local partners tended to be well-established firms with all sorts of political capital, including being major employers.Sure, maybe they got to license technology at a low cost, but they had to figure out how to use that in a vehicle, and then sell the vehicle at a profit for it to matter. That's typically a 4 year process, to learn how design a new technology into a vehicle, to vet the design, to source it and then launch it, and only then get revenue, and then get profits only if it sells well enough. And their global partner is by that point a full generation ahead of them. It's speed to market that matters. Automotive technology is not like a semiconductor circuit design that can potentially be turned into chips in 9 months, and that is selling into a monopolistic market. And in any case most automotive tech resides in the supply chain, and as the biggest vehicle market in the world, global suppliers want to sell to Chinese OEMs, they don't need government policy to urge them on.Without local partners Tesla has only banks lending on favorable terms as their support network. Otherwise there are only bureaucrats and politicians cheering them on. Sure, the government is pushing EVs, but different parts of the government have different positions, the industry people are at odds with the finance people who look askance at subsidies. Banks right now are being told to lend and then lend some more. That won't last.So it really would be nice to know more of the financial viability of Tesla's Shanghai operations. Investors are foolish to think that government support is sufficient. You are spot-on in asking the question, and in pointing out that things don't add up. Until segment reporting covers the cost side and not just the revenue side, we really don't know. The opacity does raise the suspicion, "what aren't they telling us" but that means your estimates require lots of assumptions.As an industry person, I for one find the "65% less" figure dubious. Construction labor costs, yes, but the paint shop and the welding robots for the body shop and the stamping presses? That piece doesn't make sense to me, those items tend to be globally traded, Kuka robots. [Though Kuka is now owned by a Chinese company....]  (edited) 17 Aug 2020, 05:00 PMReply0Like OldEurope To all tose gloating longs:It is always good to know the counterparts of your trades. Be assured most TSLA shorts can afford it!The 1% allocation I tend to hold in TSLA puts helps me to sleep well in this insane times. My thesis in 2016 was, that the unevitable mother of all crashes, that is to come someday, would be initiatated by a TSLA crash of epic porportion. -That did not play out. I still think, that a crash will pull down TSLA alot more than average.I could have bought a Model3 , but I chose to enjoy the shitshow, that is Tesla and TSLA and lose an equivalent sum.I am in comfort.Now, that TSLA finally has e/ps I can additionally tell myself, that valuation will matter someday...I will be short TSLA until it will unfold!I will be short at 1800, at 2100, 2300 and 470...Again, nobody is going broke on a TSLA short, as shorts tend to be sophisticated and successful investors.Longs I am not so sure... You know something will have to hit the fan someday.