That s right I sold 30 Tesla shares the other day on the dip. I think I got about $580 for
them. In my opinion, if Tesla is under $600, then it s probably a bargain. If you are still
looking at building your position, then anything in the 500s is a good price, given the all
time high hit 900 just a few months back. And it would appear that there is some serious
support when you get to the mid-500s.
But why would I sell them on the dip if the price is so low? Well I really am all in.
Whenever Tesla gets low enough, I will literally find all the money I can to invest in it.
Except I ve already done that, and am out of money. But through researching Tesla, and
producing YouTube videos on the company, it makes me very bullish. And the only way I
could afford to invest more in Tesla, was literally by selling some Tesla stock.
And that s what I did. As many of you know, I have a relatively small amount of my Tesla
holdings in LEAPs. I wont go into too much detail as to what LEAPs are, as I have in
past videos already. But essentially, it allows me to control a
lot more shares, with less money. The downside being I could lose the entire amount invested
into the LEAPs. It s just a call option contract you purchase,
where they expiry date is longer than one year.
A few days prior, I was looking at some of the prices for LEAPs that expire in March
2023. For strike prices around $850 to $900. About what the previous high has been. And
the price of these LEAPs, were only around $100.
I just want to be clear, I am in no way advising anyone to purchase LEAPs. They are a more
advanced investment technique, where you can literally lose everything you invest. I am
just sharing my experiences with you.
In other words, if before March 2023, Tesla s price increases to a little over $1000,
you would double your money. Of course, if I ran a survey to ask what most of you thought
the stock price would be in March 2023, I would guess the majority of the answers would
lie between $1500 and $2500 stock price. Quite possibly with an average of around $2000.
That may seem high, over 3 times what it is at the time of this video. But this $2,000
number is not some magic round number we are pulling out of thin air. We have justified
reasons as to why we think this number is achievable.
In fact there are several catalysts between then and now, that could certainly set the
stock price off into a new cycle. I just wanted to lock in some more Tesla shares at around
today s prices, in case it takes off again between now and then. I hope to eventually
exercise these LEAPs when they come to their expiry date.
If the LEAPs are not worth anything by the time they expire, then I might possibly just
renew them. I can likely off-set the loses against tax too.
However, exercising them likely means you don t need to pay the capital gains tax, or
at least delays it until you sell the shares. In other words, if you made $100,000 from
your LEAPs, you might have to pay $30,000 in tax, and be left with only $70,000 profit.
But if you exercise them, then that $30,000 you would have paid on tax gets to remain
in your investment. This is my strategy, I think its important
to have a strategy that you stick with, or else you might make the wrong decision. But
this is simply a way for me to lock in a price to purchase more Tesla shares in the future,
when I likely have more money. So, if you are buying LEAPs, make sure you
know why, my reason is to hedge the current stock price for another couple of years, by
which stage I hope to afford to exercise them.
Now, I actually wanted to get the June 2023 options, but they weren t quite available
yet, they were still over 2 years out, and options cant exceed 2 years. So I had to settle
for March. But we are still talking nearly 2 years out, so what events can I look forward
to over that time, that may have an impact on Tesla s stock price and my LEAPs.
In fact there are quite a few big events to occur over that time. Therefore I look at
my purchase of LEAPs, as an asymmetric investment. There are perhaps a few events that could
possibly double the stock price, or take it to $2,000 even. That would mean I get a 10
times return on my LEAPs, at that price.
Of course by Mar 2023, we would have expected the 4680 batteries to hit mass scale. With
an expected 100 gWh/yr production for 2022, by the time Mar 2023 rolls around then perhaps
Tesla will be close to a scaled annual production equivalent of around 150 gWh/yr. Or we could
say possibly the first quarter of 2023 they might be looking at nealy 40 gWh of battery
production. This would be in addition to Fremont and Shanghai, as they will likely not yet
be using the 4680 batteries. Tesla will also likely have LG and Panasonic supply them additional
4680 batteries. If we include their other battery suppliers,
then we shouldn t be too far off the battery equivalent of 1 million vehicles in the first
quarter of 2023. Of course all these batteries aren t necessarily
used for autos, and some are likely used for energy storage, perhaps by this stage.
I am simply going off numbers that we were told by Elon and Tesla.
I am not saying I think this will happen, this is basically the target that Tesla have
set. So its certainly a possibility, and is the reason its important to put so much focus
on what is happening with the 4680 batteries. If Tesla were at a run rate of 4m cars a year
by 2023, then I would have thought, there would be a good chance that the stock price
could be at $2,000.
We also have the 2 juggernaut factories coming online hopefully later this year. By March
2023 they would had over an entire year to ramp up. Judging by the rate at which Shanghai
is ramping up, as long as these factories have sufficient battery supply and components,
then these factories wont take long until they are hit their capacities. What their
actual capacities are, is still a mystery, but we would guess its potentially around
2 million each factory. Anyway, as soon as Tesla demonstrate these
factories working on a decent scale, with the 4680 batteries, then that will show the
market Tesla are capable of moving up to the big numbers.
I think its possible Tesla could reach 2 million units in 2022. I mean just look at by how
much they are increasing their total manufacturing capacity with these 2 gigantic factories,
compared to what they have now.
In addition that, we should be seeing the cybertruck coming off the lines too. If Tesla
can demonstrate that they can manufacture these without any issues from the likes of
the NHTSA. Then that will also do wonders to the stock price. The cybertruck is a product
that will always be in demand. They have shown they can design a great prototype that people
love, they just need to prove they can manufacturer it too.
Once these factories and the cybertruck have been proven, then that s another reason the
stock price could go through it s next cycle and reach $2,000.
There is always the FSD wild card. Any month or so we could have an update, that V9 is
out and is now officially feature complete. Or essentially Tesla informing us they have
cracked autonomy. From there we could start to see regulation unfold for self driving
vehicles. We know FSD is huge, its just so impressive, its hard to comprehend, and thus
believe. It s harder to invest in things you cant believe.
By March 2023, there could have been a lot of progress, and possibly even signs that
Robotaxis could become a thing. Maybe even tested in a small town. If the market starts
to believe Robotaxis are on the cards sometime in the future, even if its 5 years later,
then we ve done the numbers, Robotaxis are the biggest potential for the company.
Then we have this tax credit for US EVs. Considering the US is Tesla s best market, home turf,
and largest auto industry in the world, it is likely going to be great for Tesla s stock
price. I would imagine the bill will pass sometime this year.
By March 2023, I would have expected Tesla to have raised their prices, and reduce their
costs so much so, that they are making around 40% gross margins on their cars in the US.
That is absolutely insane. Except the thing is, they will be doing it at quantity when
Texas has opened up. By this stage, Tesla would have had several earnings reports with
the new profit from the EV credits incorporated, and no doubt making profits look very healthy
indeed. Tesla s earning per share will no doubt please Wall Street. And of course the
headlines will read, Tesla are only making profits from EV tax credits, but Tesla will
get to enjoy these credits for years to come. Assuming no major law changes.
I would expect Tesla to announce a new North-East US factory. By March 2023, it may not quite
be built, but it could be close. Although it s highly possible they might do something
similar to Fremont though, and just retrofit an existing factory. If Tesla can save themselves
perhaps 12 months of building a factory, while these tax incentives are on, then it makes
sense to take advantage of them as quickly as possible.
In fact it s possible the entire EV industry in the US could not only boom, but actually
bubble. So again, plenty of possibility these events alone could double the stock price.
We would expect that by March 2023, we actually have the model 2 in production. Going by Elon
s timeline. Even if not, then it certainly should have been revealed, and there might
likely be the world s largest building nearing completion of where the model 2s will be manufactured.
This will be Tesla s biggest selling car, well most likely the world s. If Tesla can
demonstrate this then it will put the stock price through another cycle. Just think about
it, probably around half of all Tesla s sold would be a model 2. In other words, this model
will potentially double their sales. Just from one model. And it will be done not only
with a high profit margin, but also with a $10,000 or more, optional extra for FSD. Which
stands a good chance of having achieved level 5 autonomy by this stage.
There we go, these are just around 4 or so main events that we can look forward to over
the next couple of years, of which any of them could tip the stock price to around $2,000
a share. But like I said, that would give me 10 times return on my LEAPs.
This is known as an asymmetric investment. My returns far outweigh the potential losses.
Say if there is just a 1 in 3 chance 4680 batteries work, then that s a 1 in 3 chance
of getting 10 times my money. Again 1 in 3 chance that the new factories
have reached that level of capacity by March 2023. Then that s another 1 in 3 chance of
getting 10 times return. Maybe a 1 in 5 chance of FSD reaching level
5 autonomy. And perhaps 1 in 4 chance Model 2 s are coming
off the production line by March 2023. It all adds up into a really good asymmetric
investment. Of course you can play the other side too,
perhaps a 1 in 3 chance there is a market crash before then. Or even some other black
swan event. These are the risks you take. And then there could be any other new event
or product that Tesla announces, or possibly even another stock split.
Anyway, I will keep you posted as to how they turn out.