Minimizing Tesla exposure

Sven

In light of the Elon Mask recent behavior, how do investors reduce their exposure to Tesla (TSLA) stock I their portfolio.

@hank said,
Might make an interesting topic under the “Other Investing” category. I never cease to be amazed at the extremes to which stocks and markets in general can run. A quick check on Google shows TSLA down 50% over 1 year and 62% YTD. Yikes.

Never owned TSLA. Played with ARKK (which holds TSLA) off and on. Finally got tired of messing around with such volatile type investments. But I do remember when TSLA was widely acclaimed as an investment, including by some posters here.

Per your question, I’m confident many funds own little or no TSLA. But index funds do own a big chunk. I’d have to check which indexes, but it is certainly in the S&P. So avoiding index funds might be a first step if one wants to avoid TSLA.

Regards

@Lewis Branham said,
Relatively easy to tell which funds own most of its shares and which have the most concentrated positions, two very different things, as a small fund can have a 10% position while a large index fund can own a lot of shares and not have a big position:
https://morningstar.com/stocks/xnas/tsla/ownership
I think the managers who have concentrated TSLA positions have read Atlas Shrugged one too many times, believing that "genius" executives solve the world's problems while pesky employees and the government just get in the way.

I think some of this erratic CEO behavior of late would be an immediate sale sign, but then if you read enough it's easy to see the erratic behavior and disregard for human beings was there even in the beginning. But then why does John Galt need people?

Baseball_Fan

What recent behavior are you referring to? The exposure of the grotesque censorship at Twitter that existed prior? The suppression of free speech? Working in cahoots with the government to influence the public narrative?

LewisBraham

Erratic stuff like this:

https://businessinsider.com/elon-musk-drug-tests-smoking-weed-joe-rogan-marijuana-cannabis-2022-8

https://fastcompany.com/90821123/can-your-boss-make-you-sleep-at-work-musk-twitter

https://sec.gov/news/press-release/2018-219

https://news.bloomberglaw.com/daily-labor-report/tesla-racism-suit-shows-musks-willingness-to-take-on-regulators

rforno

- Sell the stock
- Set a stop-loss
- Use options to protect the position (ie, collar, especially if done at zero-cost or a credit)
- Sell any fund with TSLA in its top-10 holdings, to include index funds

LewisBraham

I honestly think selling an index fund with a 1% or 2% TSLA position doesn't make much sense unless you're doing it for ethical reasons. VTSMX, for instance, has a 1.3% position. It won't influence performance much at that level. There is a case to be made however from an ESG perspective for divestment.

Sven

@rforno,

Sell any fund with TSLA in its top-10 holdings, to include index funds

I did exactly that in the beginning of this year on two funds for different reason - richly valuation. Found several substitutes without TSLA and they performed much better. I invest in my kids 529 plans which use index funds so can’t reduce that.

rforno

LewisBraham said:

I honestly think selling an index fund with a 1% or 2% TSLA position doesn't make much sense unless you're doing it for ethical reasons. VTSMX, for instance, has a 1.3% position. It won't influence performance much at that level. There is a case to be made however from an ESG perspective for divestment.

OK maybe not [all] index funds. My anti-indexing bias was peeking out there for a minute...

Sven

Sold two mutual funds with 5% and 9% TSLA exposure, respectively. I would have sustained much more damage if I held on to them.

yogibearbull

If we compare SP500/SPY to equal-weight SP500/RSP, then RSP has outperformed SPY. It is probably value/cyclicals outperforming growth, and TSLA had been a noise.
https://stockcharts.com/h-perf/ui?s=SPY&compare=RSP,TSLA&id=p64563854176

johnN

Bet against it inverse tsla if think more downtrends
#Tsls

My personal opinion is that it reached oversold states, macd crossed over, and at near 2yrs low points.... Very difficult bet against it now

Lots analyst predictions could be 200s 300s by 12 24 months. 2030 maybe near 1000 per share. Very difficult bet against best EV Company long term

So much speculation

**'*Forward PEG Ratio Valuation [Updated Dec 14, 2022]
☑️ S&P 500: 1.6
☑️ S&P 500 Tech: 1.8

Tesla
($157/$5.52)/48 = 0.59

$TSLA fair market PPS = 1.8 * 48 * $5.52 = $477 ~ 3x of current price

Ref:
https://yardeni.com/pub/spearnrevalgrpeg.pdf

$TSLA estimate was from on YF, next 5y growth of 48%***


Been adding LCID TSLA + chips-techs Small amt past weeks

LewisBraham

I would never recommend shorting a story stock like TSLA. Any stock prone to volatile intense speculation can burn investors in either direction.

BenWP

Baron Wealthbuilder Fund is no longer building wealth(?) for us. Maybe Ron’s funds will be back, but they have a lot of ground to make up. TSLA is held by more than just the Partners fund in the House of Baron.

LewisBraham

And now this: https://businessinsider.com/tesla-factory-employees-allege-illegal-firing-criticism-elon-musk-covid-2022-12 There is an intangible often called "brand value" that matters especially in luxury goods. I feel like Musk doesn't quite realize who his customers at Tesla most likely are and what the politics of someone who buys an electric car might be. This kind of behavior damages the brand of a prestige product people don't have to buy. Meanwhile competitors are nipping at his heels: https://greenmatters.com/renewables/tesla-top-competitors

Gary1952

Did ya’all do the same with Meta stock?

Mark

Does Meta build cars or other discretionary items?

With respect to the original post given the way Tesla stock has been minimizing itself the past week or so there may be no need to look for other ways to minimize exposure.

sma3

@BenWP @LewisBraham

Since October first, BRTRX has sorta decoupled from TSLA ( after marching in lock step for years) , down 17% vs TSLA -48%, so it looks like Baron has trimmed the TSLA exposure to less than 50% reported at the end of September. But he probably still owns huge amount

While TSLA cars are apparently quite innovative, I do not think you can use it's previous growth rates as an indicator of what the future might hold. TSLA share of EV market has been declining, especially if you look at non luxury cars ( under $50,000)

https://electrek.co/2022/11/29/tesla-owns-us-ev-market-but-losing-market-shares-data/

The major safety problems with fires etc, the impossibility of autonomous driving anytime soon all are a concern. Would you put a TSLA battery in your house for energy storage? What if it caught fire?

It is hard to quantitate the impact Musk's behavior has on sales and the stock, but it can't be popular on Wall Street and with major banks. Who in their right mind would lend this guy money?

Maybe the problems are factored into the stock price, but how can you possibly know what the next shoe to drop from Musk will be ?

LewisBraham

@Gary1952 Although Zuckerberg is not as erratic as Musk and not making toxic statements to tarnish Meta’s brand on a daily basis, many ESG funds have actually minimized or eliminated their exposure to Meta because of its ethical problems; https://medium.com/the-esg-advisor/most-sustainable-funds-sidestepped-the-meta-plunge-40c0f7b90560
I would also say that Meta has a better—from an investor’s perspective— more monopolistic product that Twitter and Tesla. Meta has an entrenched massive user base whose entire social life is wrapped up in its platform, making it much harder to leave than Twitter, which allows much smaller tidbits of communication. It is also far more entrenched than Tesla, which has a luxury product consumers can take or leave easily. A company like Tesla really can’t afford to offend its wealthy prospective customers. Frankly, I think Zuckerberg could if he chose get away with a lot more erratic behavior than Musk because of the product he’s selling. Yet he too is viewed as a problematic CEO to many ESG investors and just as entrenched in his leadership.

rono

Howdy folks,

I owned Tesla for quite a while until he bought Twitter. Then I sold it. I wanted to own it early on because of SpaceX. No long. Musk seems to be idiot/savant personified. Not only is he doing a lot to destroy Twitter, he's doing the same to Tesla. @LewisBraham mentioned above how the market of Tesla EVs is the progressive more liberal side of the economy. These are the people who have been offended by his actions with Twitter. In addition, the big boys are entering the market. I'm not a short side player, but I think Tesla has a lot further to fall.

and so it goes,

peace,

rono

BenWP

I think that the rise of Apple under Steve Jobs showed how significant a brilliant CEO can be. From my perspective as a consumer, I was (am) willing to pay up for Apple products because they were so "cool" and obviously well designed. Sit in a well-appointed automobile designed by Japan's best, then sit in an American car and the difference is immediately noticeable. Tesla made a good reputation for itself as an expensive, high-quality, electric vehicle. Lately, however, I have the distinct sense that formerly eccentric genius at the helm has become a decidedly erratic leader. Accordingly, my attraction to Tesla's cars declines in intensity and I really give more credence to the self-driving controversy. Brand image matters, at least for this consumer.

LewisBraham

The largest concentration of electric car charging stations are in liberal blue coastal states and in liberal blue cities even within red states: https://chargehub.com/en/charging-stations-map.html

Old_Joe

And now this, from a current report in the San Francisco Chronicle:

Layoffs keep coming with Tesla reportedly cutting jobs next quarter

Electric car maker Tesla will reportedly freeze hiring and go through a fresh round of layoffs as job cuts at marquee companies small and large, including Twitter and Meta, have roiled a range of tech companies across the Bay Area.

Electric car blog Electrek first reported the story.

The cuts will reportedly come next quarter. Tesla did not respond to an emailed request for comment, and has not had a media department for some time. It wasn’t clear which departments or locations could be affected.

The company moved its headquarters from Palo Alto to Austin, Texas last year, but still has offices in the Bay Area and a large manufacturing facility in Fremont that employs around 10,000 people.

Tesla’s stock has trended down recently, dipping since CEO Elon Musk took over the social media site Twitter earlier this year. Despite topping $300 per share in the fall, shares had dropped below the $140 per share mark as of Wednesday.

Tesla investors have taken to Twitter in recent days to criticize the company and for Musk appearing to spend little time recently running the electric car maker since his turbulent takeover at Twitter.

Musk told Tesla investors on an earnings call in October that demand for the company’s electric vehicles was strong and that the company expected to sell every car it produced well into the foreseeable future.

The company reported revenues of $21.5 billion during its most recent quarterly report, slightly below Wall Street expectations.

The company has continued to tell investors it expects to increase vehicle deliveries by around 50% each year.

LewisBraham

Given all of the above, the fact that the stock is down 60% in 2022 means it could still be due for a bounce--hence it makes a bad short candidate.

johnN

Added more tsla, 15% trading acct portfolio in tsla. Hold long terms hope 2.5 X - 3.5X by then or start selling once reach $600s $650s 700$s rsi 75 and maybe running out of steams. Keep monthly cover call 20-25 deltas of strike prices til then, very good monthly premiums. By spring 23 TSLA maybe turnaround (hope stock come to fruition and yield good Er RESULTS and stock prices probably much improved. ) at least Elon learnt mistakes and looking for twitter ceo (I would too if lost 65 70% $ of my assets lol, be quiet and focus on my work instead sending mean tweets) .

RSI now 14s extremely attractive. Friend been trading Tsla over past 8 yrs sold most everything and bought lots Tsla (80% portfolio in tsla now. Crazy swing trader)... Fwiw

rforno

rono said:

Howdy folks,

I owned Tesla for quite a while until he bought Twitter. Then I sold it. I wanted to own it early on because of SpaceX. No long. Musk seems to be idiot/savant personified. Not only is he doing a lot to destroy Twitter, he's doing the same to Tesla.
rono

Check out Rocket Lab (RKLB) -- which I own. They seem to be a very close competitor to SpaceX in terms of cost-effective launch capabilities. And no Musk!

LewisBraham

Heavy selling today, down 9%, for some of the same concerns it seems: https://cnbc.com/2022/12/22/tesla-shares-slide-on-demand-concerns-elon-musk-twitter-distraction.html

Also, this article says it is the most profitable short pick of 2022:
https://marketwatch.com/story/tesla-is-the-most-profitable-short-pick-of-2022-with-nearly-14-billion-in-proceeds-since-elon-musk-agreed-to-buy-twitter-11671736610

Old_Joe

Here's excerpts from a current article from the San Francisco Chronicle. It seems to be more bad news for Tesla.

An 8-vehicle crash on the Bay Bridge last month that left several people injured may have been triggered by a Tesla’s “full self-driving” suddenly coming to a stop, CNN reported.

The wreck, which occurred at 12:40 p.m. Thanksgiving Day, started when a vehicle slammed into a wall, which caused up to five cars to pile up in the Interstate 80 tunnel through Yerba Buena Island. Ambulances had to rush two injured people to hospitals and two lanes remained closed for over an hour, snarling trafic on the eastern span of the bridge.

According to a traffic crash report obtained by CNN, the driver of the Tesla told the California Highway Patrol that they were traveling at about 55 miles per hour and shifted into the far left lane when the vehicle’s “full self-driving” abruptly braked.

California Highway Patrol officers reviewed videos that showed the Tesla switching lanes and then slowly coming to a stop, CNN reported.

The National Highway Traffic Safety Administration said Thursday it will send a team to investigate the crash, the Associated Press reported.

Odd that it's taken the NHTSA almost a month to decide to "investigate". I suppose that if the vehicle hasn't been tampered with there would be residual information in the computer memory.

Sven

Will car manufacturer be charged for the accident instead of the car owner? The blackbox will have data for forensic investigation.

Old_Joe

@Sven- What a great question. I hadn't really considered that until you mentioned it. Now that we have vehicles with a "mind" of their own, exactly who is responsible when a vehicle actually causes an accident?

The article below mentions that this accident injured 18 people. Now who are all of those insurance companies going to go after... the driver's insurance company with it's limited payout, or Musk and Tesla?

Old_Joe

And here's excerpts from yet another article from the San Francisco Chronicle. More bad news for Tesla...

New California law effectively bans Tesla from advertising its cars as ‘Full Self-Driving’

A Tesla with “Full Self-Driving” software was reportedly responsible for causing an 8-car crash on the Bay Bridge on Thanksgiving that injured 18 people after the car abruptly stopped.

But, starting next year, Tesla will effectively be banned from advertising its vehicles as Full Self-Driving under a new law signed by Gov. Gavin Newsom this legislative session.

Senate Bill 1398 is among the hundreds of new state laws taking effect in 2023 and specifically targets the electric-car maker’s marketing of software included in some Tesla models that imply that the car can fully drive itself — which it can’t.

The new law prohibits California dealers and manufacturers from “deceptively naming or marketing” a car as self-driving if it’s only equipped with partial automation features that still require human drivers to pay attention and handle driving.

Tesla, owned by Elon Musk, lobbied against the bill, arguing that it already makes Tesla buyers aware of the Full Self-Driving software’s limitations.

rforno

Old_Joe said:

@Sven- What a great question. I hadn't really considered that until you mentioned it. Now that we have vehicles with a "mind" of their own, exactly who is responsible when a vehicle actually causes an accident?

The article below mentions that this accident injured 18 people. Now who are all of those insurance companies going to go after... the driver's insurance company with it's limited payout, or Musk and Tesla?

This is a major point of discussion in the CS/AI ethics community. No clear answer yet .. but my take, as part of the computing world, is that humans develop AI and how AI learns and ultimately might act, so it's still human's fault if/when things go brrrr, boom, or blah.

Speaking of cars, IIRC TSLA was accused in the past year or so of having its cars automatically turn off any enabled self-driving feature a microsecond before a likely impact, with the goal being to shift blame from the car (and its black box 'proof') to driver's word.

Mark

@rforno - nothing about that sounds good except for Musk and Tesla.