28 ms·

Tencent buys 5% of Tesla

606 points by jhartmann 10y ago

jpeg_hero 10y ago
Tesla shorts can't get a break. First a smooth $1B+ capital raise without a stock hiccup and now this.
- Blackthorn 10y ago
  Every budding short seller needs to, at some point in their career, learn the lesson of never shorting a growth tech stock.
  - jonknee 10y ago
    Or to confuse Tesla with a tech company.
    - bredren 10y ago
      What kind of company would you call it?
      - sah2ed 10y ago
        A battery/renewable energy company.
        reilly3000 10y ago
        I think the key distinction is hard costs. Tech companies have server costs. Tesla has manufacturing and contractor expenses.
        jonknee 10y ago
        Exactly. Tesla is a tech company like GE is a tech company. It's modern manufacturing. (This only matters for valuation sake, a classic tech play can achieve profit margins far higher than a manufacturing firm.)
        lightbyte 10y ago
        Tesla has plenty of server architecture, their cars are constantly talking to it for data collection and updates.
        Someone 10y ago
        The word "tech" apparently has changed meaning in some circles. https://en.wikipedia.org/wiki/Technology https://en.wikipedia.org/wiki/Technology: "Technology ("science of craft", from Greek τέχνη, techne, "art, skill, cunning of hand"; and -λογία, -logia) is the collection of techniques, skills, methods and processes used in the production of goods or services or in the accomplishment of objectives, such as scientific investigation. Technology can be the knowledge of techniques, processes, and the like, or it can be embedded in machines which can be operated without detailed knowledge of their workings." You can argue that that isn't accurate, but I don't see how you can argue that the categorical statement "tech companies have server costs" follows from it (I can't even find the word "server" on that page, or on https://en.wikipedia.org/wiki/Tech https://en.wikipedia.org/wiki/Tech)
        olivermarks 10y ago
        I thought panasonic was their white label battery supplier/partner?
        sah2ed 10y ago
        Yes, but even they can't keep up with the projected demand for batteries which is why Tesla is building out its own factory [1] in partnership with Panasonic [2] to manufacture batteries. [1] https://www.tesla.com/gigafactory https://www.tesla.com/gigafactory [2] https://www.tesla.com/blog/panasonic-and-tesla-sign-agreement-gigafactory https://www.tesla.com/blog/panasonic-and-tesla-sign-agreemen...
      - jonknee 10y ago
        Every company these days is a tech company in some respects, but I don't think Tesla fits the bill in the general sense. Tesla is a green energy manufacturing company. The only reason I think this matters is their finances are a lot different than a tech company. You are correct that Tesla is currently priced like a tech company though, so maybe I'm way off!
        debaserab2 10y ago
        ..so what is a tech company then?
        deleted 10y ago
        [deleted]
      - tenpies 10y ago
        TSLA behaves mostly like 3 X Musk Tweets Bull ETF.
        elastic_church 10y ago
        Now now, don't give Direxion any ideas
      - xadhominemx 10y ago
        A car company.
    - netule 10y ago
      They changed their name this year from Tesla Motors to Tesla Inc. to indicate a wider focus on technologies, not just cars (solar panels, batteries). How do they not qualify as a tech company?
      - jonknee 10y ago
        They changed their name because they bought Elon's solar company (which was also not a tech company).
        Cerium 10y ago
        I'm curious about what you would consider a tech company. For me a tech company is any company that uses the development of technology as a competitive advantage. Solar is not, major solar companies are not developing innovative technology. Tesla is, they do not have an advantage in scale or low prices, but have advantage in how their vehicles function.
        deleted 10y ago
        [deleted]
        greglindahl 10y ago
        So you don't think that 3d printing solar roof tiles is innovative solar technology? I don't think anyone else is talking about that.
        vkou 10y ago
        Is 3d-printing car parts an innovative technology? Is Ford now a tech company? [1] [1] https://techcrunch.com/2017/03/05/ford-begins-testing-3d-printing-large-car-parts-for-cost-effective-customization/ https://techcrunch.com/2017/03/05/ford-begins-testing-3d-pri...
        dkrich 10y ago
        For me a tech company is any company that uses the development of technology as a competitive advantage. So then is Ford a tech company? If not, then I'd be interested to hear why not, based on that criteria. Their cars are technology and they continuously develop and improve them as a competitive advantage. I think people think of Tesla as a tech company because the founder is Elon Musk. If Tesla were a spin-off brand of GM or Ford, it would be another car company.
    - lanna 10y ago
      you seem to have a very narrow understanding of what technology means. computers are not the only "technology" in the world.
  - mayukh 10y ago
    Rather needs to understand how to have a basket of shorts and manage risk as opposed to shorting single names.
  - GCA10 10y ago
    Yes. Short-selling pioneer Bob Wilson nailed the key insight on these situations. They are "manana stocks," Wilson declared, way back in the 1970s. Their valuation is premised on the notion that something wonderful will happen in the future. Time horizons keep being pushed out, but the stocks' fans don't mind. Shorts can get very cranky and righteous about each little bit of slippage. But as long as new enthusiasts keep showing up, and old ones feel lenient, it's hopeless to insist on strict accountability. Even a short-lived burst of optimism is sufficient to arrange more funding, so manana always seems within reach. Worst case: you're shorting Amazon. The bulls were right, and you go broke. Best case: you're shorting something like Energy Conversion Devices, which eventually did run out of money and file for Chapter 11 in 2012. Shorts had been predicting its demise since the 1970s. That is a long time to wait.
    - kornish 10y ago
      "The market can stay irrational longer than you can stay solvent." – John Maynard Keynes
    - clock_tower 10y ago
      Best case: you're shorting Sun Microsystems at the beginning of 2000, and it goes from $300/share to $3/share in the next 3 years. (http://www.1stock1.com/1stock1_211.htm http://www.1stock1.com/1stock1_211.htm) My advice is to just not touch tech stocks; going short on them is just as dangerous as going long.
      - marvin 10y ago
        Even the best case wouldn't have you more than double your money, if you put up 1:1 collateral. I guess you could have less collateral than this, but in that case, given a growth stock, you would be wiped out if there was a modest increase. I don't see the risk/reward curve for long-term shorting.
        mortehu 10y ago
        When the price starts dropping, you would have to sell more shares to maintain a 1:1 ratio. For example, you can double the number of shares each time the price drops by half, and make up to 200%.
- jgalt212 10y ago
  The raise will dilute earnings for common shareholders, so definitely a downward force on stock price. That being said, this investment and the recent raise you alluded to should clobber the put skew. http://www.volcube.com/resources/options-articles/what-is-option-put-skew/ http://www.volcube.com/resources/options-articles/what-is-op...
  - PaulHoule 10y ago
    One of life's little mysteries is that you almost always lose money if you invest internationally. A friend of mine says it is because the locals know what is going on better than you do. Tencent was a major investor in Magic Leap and the Saudi Sovereign Fund invested heavily in .coms in early 2000. It is definitely not a sell signal, but I would not buy what Tencent is buying.
    - g123g 10y ago
      You should have told this fact to Yahoo management before they invested in Alibaba or maybe to Naspers before they invested in Tencent.
    - edsheeran 10y ago
      Sounds like confirmation bias, also one of life's mysteries.
    - davedx 10y ago
      Citation definitely needed. Most of my investments are in stocks and funds outside of where I live (Netherlands). Guess which parts of my portfolio aren't doing so well? The EU bonds.
    - deleted 10y ago
      [deleted]
    - dkersten 10y ago
      "I would not buy what Tencent is buying." Tencent own a lot of stock in (international) companies that are doing well too. For example, Riot Games, Epic Games and Snapchat. Similar things can be said about Alibaba.
- Mikeb85 10y ago
  Is anyone actually short Tesla to a significant degree? I can understand the normal hedging positions and daily trading, but shorting a stock with so much positive sentiment is folly...
  - marvin 10y ago
    31 million TSLA shares are currently held short, which represents somewhere in the region of 20% of the non-insider shares. (Yahoo finance says 38% of the float, so I guess it depends how many shares you consider freely available on the market). http://www.nasdaq.com/symbol/tsla/short-interest http://www.nasdaq.com/symbol/tsla/short-interest
    - restalis 10y ago
      Petrodollar players doubling-down?
      - erikpukinskis 10y ago
        There are some reasonable bets here. Russia has a vested interest in climate change... their biggest liability is cold and ice, a rise in sea level and 5 degree bump in average temps would give them a much bigger role in agriculture and shipping. Add that to the petrodollars from selling their oil reserves and you've got a game changer for them economically. China probably loses at least temporarily in the runaway climate change event due to destroyed cropland and refugees. The U.S. has exposure on both sides so it's a little more moot for us. We'll lose quite a lot of biodiversity, and may take a big hit to agriculture but we're banking petrodollars and have so much upside when people move to virtual reality we'll be fine. If we were horribly exposed Dems/Reps wouldn't be split on the issue, as clueless as they are. And of course there are the Saudis and corporate/investment petro interests you allude to. Russia/Saud/Exxon vs China with U.S. on the sidelines... not sure who wins there. I really hope we can transition to sustainable energy, but there are big players that stand to gain from delaying it until the reserves are burnt. It's not a bet I would take but I understand why people would bet on there being plenty of feet sticking out to trip up Tesla and co.
  - 10y ago
- deleted 10y ago
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- prolly_a_moron 10y ago
  The stock has been stagnant for a long time, and it's still off its high. Shorts have done fine. What's amazing are the longs seeing capital raises at mediocre terms as a wide open positive.
  - davedx 10y ago
    Who says the capital raise is a 'wide open positive'? As someone long TSLA I'm not ecstatic. But short of selling my stock, how else can I signal?
    - prolly_a_moron 10y ago
      >Who says the capital raise is a 'wide open positive'? The guy at the top of this thread who said "Shorts can't buy a break". It's at least arguable that these sorts of capital raises are exactly what the shorts are looking for.
  - danhak 10y ago
    This was not a capital raise. Read the filing. Tencent acquired most of the shares on the open market and the remainder in the round that was announced earlier this month.
    - prolly_a_moron 10y ago
      >This was not a capital raise. Read the filing. I don't need to read a filing to know that when you create shares out of nowhere, and sell them, diluting current shareholders, it's a capital raise. What else would you call it?
      - danhak 10y ago
        Do you understand that's not what happens when shares are acquired on the open market?
        prolly_a_moron 10y ago
- Afforess 10y ago
  This is why you should purchase put options instead of short selling. Exposure to short selling is theoretically infinite. Exposure to put options is just the price you paid for the option. Shorting generally should only be for companies whose solvency is in doubt.
  - samfisher83 10y ago
    With put option you pay a big premium for the right for someone else to take that risk. If the company has a high volatility like Tesla you will pay a big premium to buy that option.
  - paul_milovanov 10y ago
    Upside insurance isn't free. There's no free lunch.
  - reverend_gonzo 10y ago
    This is wrong. You should not be trading options if you only have a directional view of a stock, as you will get eaten alive. Options pricing involves much more than just the underlying stock. Most importantly, as another poster said, there is implied volatility. There is also time risk and interest rate risk priced into the option. With options, you could be right on direction, and still lose money.
    - martinko 10y ago
      If your strategy is to hold them in order to exercise them you do not need to worry about their pricing.
  - FeepingCreature 10y ago
    I wish people could buy something like an "implied short", which would basically be an index minus Tesla.
    - Ericson2314 10y ago
      In general, I wish there were safer ways to short.
- laurent123456 10y ago
  I didn't short the stock but I can understand why someone would. They are expected to generate over 90% of their value after 2020 [0]. There's the expectation that Elon Musk will definitely deliver, that Tesla market share will not be eaten up by other carmakers when they seriously start releasing electric vehicles. The expectation that electric and not another form of energy, such as hydrogen, will dominate, etc. There's a lot that could go wrong and a lot of unknown variables. Then again everything might turn out fine, the point is that no-one know for sure. [0] https://webcache.googleusercontent.com/search?q=cache:UBQtFuwrjtEJ:www.economist.com/news/business/21717421-three-financial-sanity-tests-whether-there-bubble-are-technology-firms-madly+&cd=9&hl=en&ct=clnk&gl=us https://webcache.googleusercontent.com/search?q=cache:UBQtFu...
  - spyspy 10y ago
    > when they seriously start releasing electric vehicles They've been "serious" for a long time. Chevy has been selling the Volt since 2010. If they were going to muscle out Tesla they would have done it by now. And it's not just about technology. Tesla has the customer reputation that companies like GM will never have again.
    - Robotbeat 10y ago
      I own a Volt. Best car I've ever driven. GM doesn't care much for it. The only advertising they really do for it basically is trying to steal EV customers from Nissan's Leaf. Really dumb. And the dealers don't like it because 1) they don't know how to service them and especially 2) they almost never need servicing. If you run almost exclusively on electric, you only need like 4-5 oil changes in the entire life of the car. And the brakes last forever, too.
      - vvanders 10y ago
        Yup, which is why any entrenched player is going to have to both build an incredible car and fight against their dealerships to sell it.
- M_Grey 10y ago
  Over the next year or so, it should be clear if they'll be left in the cold, or very wealthy. Pretty much everyone seems to agree that the Model 3 needs to do well in an unprecedented way (not impossible), or Tesla is in very deep trouble (not impossible). It's hard to imagine the BMW and Mercedes aren't working on things too, and they won't have horror stories of their cars being in the shops for the better part of a year. This is still so uncertain, and I for one wouldn't feel comfortable even guessing, never mind guessing with real money.
- enahs-sf 10y ago
  meanwhile the straddlers and long haul guys are making a killing right now.
smaili 10y ago
> Tencent is a prolific investor. It holds equity in Snap, this year’s hot tech IPO, among others following an early investment. While that interest in messaging makes sense since Tencent’s operates China’s dominant chat app — WeChat — it isn’t immediately clear whether the Tesla investment has strategic undertones. This was my immediate question as well. Is this purely an investment for its portfolio or is there a strategic element as well? I imagine being able to send/receive messags on WeChat as the beginning of something more.
- ihsw2 10y ago
  Having access to the internals at Tesla is interesting and potentially powerful -- significant ownership share brings many benefits that are by no means small. Albeit on a need-to-know basis and through a peephole, it is nonetheless advantageous. It may cost $1.7B but it guarantees continued access, whereas throwing technical exfiltration (ie: hacking) and manual exfiltration (ie: mole in Tesla staff) whose resources are limited and unpredictable. It's also a good financial investment.
  - erikpukinskis 10y ago
    Can you explain what kind of access you mean? I thought preferential information sharing with specific investors violated SEC rules?
    - chillydawg 10y ago
      not if they have board seats
      - mtgx 10y ago
        Yes, that's the real question. If Tencent obtained a board seat as well, then I could think of all sorts of scenarios that could benefit Tencent in China, but not necessarily Tesla.
    - deleted 10y ago
      [deleted]
deleted 10y ago
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turingbook 10y ago
Smart move. Tencent's investing but not controlling strategy make it good supporter of the new generation of ambitious entrepreneurs against AAAAF(Apple Alphabet Amazon Alibaba Facebook): - JD - Didi - Snap - Meituan-Dianping ……
- yeukhon 10y ago
  I am not following. Who are the new generation of ambitious entrepreneurs?
  - tzakrajs 10y ago
    I guess Elon? He's no spring chicken, but certainly ambitious and an entrepreneur.
    - yeukhon 10y ago
      Okay, but that's kind of an unfair comparison since Facebook, Google are corporations. Elon is a person. But if the point is tech founders should actively invest on their own outside of their company, okay that's fair. I am not sure how often Jack Ma, Mark Zuckerberg or Jeff Bezos invest in for-profit companies outside of their company's investment arm, but I think they do.
- bpicolo 10y ago
  > but not controlling strategy I mean, they bought all of league of legends. Their primary driver is most likely "let's make money".
  - turingbook 10y ago
    Games are Tencent's backyard and cash cow.
    - epynonymous 10y ago
      not entirely true, i imagine wechat is a huge advertising platform for the as well.
11thEarlOfMar 10y ago
I see this move as a blessing for Tesla to gain market share in China. The stock is valued for growth far into the future, and achieving that outcome is really iffy without a robust China market. [edit] I'm speculating, but I don't think TenCent could have gotten as big as it has without the blessing of the Chinese government. That is the basis for my view.
- devy 10y ago
  > I see this move as a blessing for Tesla to gain market share in China. Yes, and Tencent is betting on it, since Tesla Chinese market sales has just broken $1B [1], soon Chinese market will be Tesla's biggest market with Chinese government's policy leaning on supporting EV industries in a MAJOR way. Win-win! http://fortune.com/2017/03/03/tesla-one-billion-sales-china/ http://fortune.com/2017/03/03/tesla-one-billion-sales-china/
txmx2000 10y ago
I only need Twocent to know this is a bad idea.
- sidcool 10y ago
  Why?
- Markoff 10y ago
  still better and less risky than keeping money in free falling RMB
icantdrive55 10y ago
I think they knew solar is the future, all around the world. China has massive pollution, and most homes/businesses that have access to direct sunlight. (Yes--I know solar works 50% on cloudy day. It doesn't work well with a lot foliage coverage. China looks barren of trees--sadly.) My hope is those solar tiles come down drastically in price. My hope is the average roof will be cost effective to put said tiles up. I think those solar tiles will be Tesla's Trump card. It will probally be in four years, or more in the United States. We will need a new president. (I was for Trump putting Coal miners back to work, until I found out the problem is not regulations, but automation. Actually, I want clean air. We need a better way of supporting people affected by the elimination of old ways of doing things; like a Basic Income.). Sorry about being all over the place, but there are no simple answers. Trump is just finding this out. I think Tencent saw a long value in the stock, even though their citizens will not likely buy Tesla's tiles. They will buy the cheapest knock-off as usual, but the rest of the civilized world will buy Tesla's product. (I don't know what patents are on these new Tesla tiles, but I bet they are seen as a valuable commodity, even to a cheating society like China.)
camflan 10y ago
They should've bought 10%...or change their name to Fivecent
- Le_SDT 10y ago
  I think puns in the comment section belong to reddit
  - hyperbovine 10y ago
    What, we can't have puns now? Lighten up.
  - hanspeter 10y ago
    I came here for this pun. I also knew I had to dig it up from the bottom.
woodandsteel 10y ago
I suppose the administration is going to argue this move supports Trump's claim that global climate change is a Chinese plot to undermine the American economy.
intrasight 10y ago
Funny. Just yesterday I commented on an HN thread that my first electric car would likely be Chinese, but that it might have the "Tesla" name on it.
deleted 10y ago
[deleted]
vit05 10y ago
Is this showing that they haven´t found a Chinese company that could compete against tesla? China is investing a lot in Solar energy, batteries and have car companies that want to become global players, and most of Tencent investments are on Chinese companies that make products focused on China and Asian markets. I do not know if they buying in open market tells more about Tesla potential or about China future in cars and energy. https://www.crunchbase.com/organization/tencent#/entity https://www.crunchbase.com/organization/tencent#/entity
- shawn-furyan 10y ago
  A $2B investment doesn't really preclude other similar future plays for a $200B company. So I think there's not enough information to draw that sort of conclusion.
dmix 10y ago
Tesla recently announced they are ramping up their Model 3 production even more than what some people thought was already optimistic numbers: https://www.bloomberg.com/news/articles/2017-03-27/tesla-model-3-ramp-up-aims-to-crush-bmw-and-mercedes https://www.bloomberg.com/news/articles/2017-03-27/tesla-mod... > For Musk to hit all of his targets, Tesla would need to build about 430,000 Model 3s by the end of next year. That’s more than all of the electric cars sold planet-wide last year. > Even if half of the Model 3 inventory shipped to other countries, 2 U.S. sales under Musk’s targets would outpace the BMW 3 Series and the Mercedes C class—combined. > To sell that many $35,000 sedans in the U.S. “would be absolutely unprecedented based on what we know about car markets today and how people spend their dollars,” said Salim Morsy, electric car analyst at Bloomberg New Energy Finance. “It could happen. I’m pretty sure it won’t.” If they could pull this off this might be a great investment by Tencent. It's also great for the car industry and environment as well. Especially considering their work on automated driving. If they get that many cars on the road it would give them a ton of data and a big advantage/lead in AI over other companies. But it could also be setting the bar too high and setting them up for failure (even though they might otherwise have nailed targets). Regardless, as a design fan it would be interesting to see so many Teslas on the road. They are great looking cars.
- aphextron 10y ago
  > To sell that many $35,000 sedans in the U.S. “would be absolutely unprecedented based on what we know about car markets today and how people spend their dollars,” said Salim Morsy, electric car analyst at Bloomberg New Energy Finance. “It could happen. I’m pretty sure it won’t.” Model 3's will sell literally as fast as Tesla can push them off the production line. The pent up demand for this thing is insane. Over 400,000 people have already paid $1000 deposits on their cars. The only thing that could possibly stop Tesla is their own inability to deliver.
  - hueving 10y ago
    Or withdrawals from people. The deposits are non-committal so people can cancel without losing anything.
Digit-Al 10y ago
Shouldn't they have bought ten(per)cent?
Kiro 10y ago
Tencent's reach is mind-boggling: https://en.wikipedia.org/wiki/Tencent#Investments https://en.wikipedia.org/wiki/Tencent#Investments
ge96 10y ago
I thought I saw TenCent's name in Kong Skull Island
- ge96 10y ago
  Ahh I guess they're not connected tencent pictures and tencent
matthewhall 10y ago
I have a bad feeling about this...
umeshunni 10y ago
Worth noting that Tencent is also an investor in Future mobility which has been remarkably quiet since their funding announcement last year: https://www.crunchbase.com/organization/future-mobility#/entity https://www.crunchbase.com/organization/future-mobility#/ent...
Proven 10y ago
Haha, lunacy! Tessa is crap.
bigiain 10y ago
When I first read this, my head saw "Fifty Cent"... And I thought "A _rapper_ has just bought $1.7billion worth of Tesla shares???" and was all ready to make "Has Tesla already become the Cristal Champagne of car brands?" gags... Still, half a billion return in two weeks on a 1.7 billion play is pretty nice money...
- elgenie 10y ago
  Fifty Cent got a minority stake in Glaceau instead of a payment for endorsing their Vitamin Water. When Glaceau sold to Coca-Cola, that equity was worth somewhere in the neighborhood of $100 million.
  - broodbucket 10y ago
    Pretty sure 50 is bankrupt now.
    - reanim8ed 10y ago
      > Pretty sure 50 is bankrupt now. It was fake: http://www.dailymail.co.uk/news/article-3470122/He-s-far-broke-Bankrupt-50-Cent-64-MILLION-assets-10-million-checking-stocks-earning-184-000-month.html http://www.dailymail.co.uk/news/article-3470122/He-s-far-bro...
BlytheSchuma 10y ago
Now I can get free legendary skins with purchase of a model 3? What time to be alive.
andy_ppp 10y ago
The Model 3 will come with full automation and an Uber competitor. Just a guess why they are so confident about hitting their numbers.
koreyb 10y ago
When did it become cool to write poorly like Trump? Or vertical integration..as well as protecting Elon's investment by bailing out SCTY. It was $3.25bn because they held the note on leased systems. Under TSLA they shifted to selling solar shingles outright.
- radiorental 10y ago
  > When did it become cool to write poorly like Trump? That's just low. First, I'm dyslexic. Second, I was on my new mobile with a new keyboard. Please refrain from turning HN into redit.
  - koreyb 10y ago
    It would be low if I knew you were dyslexic. Your other writing is spot on. Was looking for discussion on the topic instead of someone acting like a victim.
    - radiorental 10y ago
      A discussion on the topic... Of whether I write like Trump? I'm sorry,am I missing something?
      - koreyb 10y ago
        Only the other 2 sentences in my post. Off subject, you may find this cool https://youtu.be/cfRqNAhAe6c https://youtu.be/cfRqNAhAe6c
        radiorental 10y ago
        Thanks! Some very cool stuff in the pipeline from Nissan. I'd be wary of these controlled demos though, it's a tougher problem in the real world. I think the path forward are 3rd party units like the PX2 from Nvidia https://www.youtube.com/watch?v=-96BEoXJMs0 https://www.youtube.com/watch?v=-96BEoXJMs0 Apple, Tesla, Google & Baidu have sucked up all the talent. That's pushed out development timelines for automotive manufacturers like Nissan beyond someone like Nvidia shipping an off-the-shelf solution.
Markoff 10y ago
this just shows how distrustful are Chinese about their own currency that they seek any way to store money abroad in safe harbor away from RMB and Chinese government

606 points by jhartmann 10y ago

jpeg_hero 10y ago

Tesla shorts can't get a break. First a smooth $1B+ capital raise without a stock hiccup and now this.

Blackthorn 10y ago
Every budding short seller needs to, at some point in their career, learn the lesson of never shorting a growth tech stock.
- jonknee 10y ago
  Or to confuse Tesla with a tech company.
  - bredren 10y ago
    What kind of company would you call it?
    - sah2ed 10y ago
      A battery/renewable energy company.
      - reilly3000 10y ago
        I think the key distinction is hard costs. Tech companies have server costs. Tesla has manufacturing and contractor expenses.
        jonknee 10y ago
        Exactly. Tesla is a tech company like GE is a tech company. It's modern manufacturing. (This only matters for valuation sake, a classic tech play can achieve profit margins far higher than a manufacturing firm.)
        lightbyte 10y ago
        Tesla has plenty of server architecture, their cars are constantly talking to it for data collection and updates.
        Someone 10y ago
        The word "tech" apparently has changed meaning in some circles. https://en.wikipedia.org/wiki/Technology https://en.wikipedia.org/wiki/Technology: "Technology ("science of craft", from Greek τέχνη, techne, "art, skill, cunning of hand"; and -λογία, -logia) is the collection of techniques, skills, methods and processes used in the production of goods or services or in the accomplishment of objectives, such as scientific investigation. Technology can be the knowledge of techniques, processes, and the like, or it can be embedded in machines which can be operated without detailed knowledge of their workings." You can argue that that isn't accurate, but I don't see how you can argue that the categorical statement "tech companies have server costs" follows from it (I can't even find the word "server" on that page, or on https://en.wikipedia.org/wiki/Tech https://en.wikipedia.org/wiki/Tech)
      - olivermarks 10y ago
        I thought panasonic was their white label battery supplier/partner?
        sah2ed 10y ago
        Yes, but even they can't keep up with the projected demand for batteries which is why Tesla is building out its own factory [1] in partnership with Panasonic [2] to manufacture batteries. [1] https://www.tesla.com/gigafactory https://www.tesla.com/gigafactory [2] https://www.tesla.com/blog/panasonic-and-tesla-sign-agreement-gigafactory https://www.tesla.com/blog/panasonic-and-tesla-sign-agreemen...
    - jonknee 10y ago
      Every company these days is a tech company in some respects, but I don't think Tesla fits the bill in the general sense. Tesla is a green energy manufacturing company. The only reason I think this matters is their finances are a lot different than a tech company. You are correct that Tesla is currently priced like a tech company though, so maybe I'm way off!
      - debaserab2 10y ago
        ..so what is a tech company then?
      - deleted 10y ago
        [deleted]
    - tenpies 10y ago
      TSLA behaves mostly like 3 X Musk Tweets Bull ETF.
      - elastic_church 10y ago
        Now now, don't give Direxion any ideas
    - xadhominemx 10y ago
      A car company.
  - netule 10y ago
    They changed their name this year from Tesla Motors to Tesla Inc. to indicate a wider focus on technologies, not just cars (solar panels, batteries). How do they not qualify as a tech company?
    - jonknee 10y ago
      They changed their name because they bought Elon's solar company (which was also not a tech company).
      - Cerium 10y ago
        I'm curious about what you would consider a tech company. For me a tech company is any company that uses the development of technology as a competitive advantage. Solar is not, major solar companies are not developing innovative technology. Tesla is, they do not have an advantage in scale or low prices, but have advantage in how their vehicles function.
        deleted 10y ago
        [deleted]
        greglindahl 10y ago
        So you don't think that 3d printing solar roof tiles is innovative solar technology? I don't think anyone else is talking about that.
        vkou 10y ago
        Is 3d-printing car parts an innovative technology? Is Ford now a tech company? [1] [1] https://techcrunch.com/2017/03/05/ford-begins-testing-3d-printing-large-car-parts-for-cost-effective-customization/ https://techcrunch.com/2017/03/05/ford-begins-testing-3d-pri...
        dkrich 10y ago
        For me a tech company is any company that uses the development of technology as a competitive advantage. So then is Ford a tech company? If not, then I'd be interested to hear why not, based on that criteria. Their cars are technology and they continuously develop and improve them as a competitive advantage. I think people think of Tesla as a tech company because the founder is Elon Musk. If Tesla were a spin-off brand of GM or Ford, it would be another car company.
  - lanna 10y ago
    you seem to have a very narrow understanding of what technology means. computers are not the only "technology" in the world.
- mayukh 10y ago
  Rather needs to understand how to have a basket of shorts and manage risk as opposed to shorting single names.
- GCA10 10y ago
  Yes. Short-selling pioneer Bob Wilson nailed the key insight on these situations. They are "manana stocks," Wilson declared, way back in the 1970s. Their valuation is premised on the notion that something wonderful will happen in the future. Time horizons keep being pushed out, but the stocks' fans don't mind. Shorts can get very cranky and righteous about each little bit of slippage. But as long as new enthusiasts keep showing up, and old ones feel lenient, it's hopeless to insist on strict accountability. Even a short-lived burst of optimism is sufficient to arrange more funding, so manana always seems within reach. Worst case: you're shorting Amazon. The bulls were right, and you go broke. Best case: you're shorting something like Energy Conversion Devices, which eventually did run out of money and file for Chapter 11 in 2012. Shorts had been predicting its demise since the 1970s. That is a long time to wait.
  - kornish 10y ago
    "The market can stay irrational longer than you can stay solvent." – John Maynard Keynes
  - clock_tower 10y ago
    Best case: you're shorting Sun Microsystems at the beginning of 2000, and it goes from $300/share to $3/share in the next 3 years. (http://www.1stock1.com/1stock1_211.htm http://www.1stock1.com/1stock1_211.htm) My advice is to just not touch tech stocks; going short on them is just as dangerous as going long.
    - marvin 10y ago
      Even the best case wouldn't have you more than double your money, if you put up 1:1 collateral. I guess you could have less collateral than this, but in that case, given a growth stock, you would be wiped out if there was a modest increase. I don't see the risk/reward curve for long-term shorting.
      - mortehu 10y ago
        When the price starts dropping, you would have to sell more shares to maintain a 1:1 ratio. For example, you can double the number of shares each time the price drops by half, and make up to 200%.
jgalt212 10y ago
The raise will dilute earnings for common shareholders, so definitely a downward force on stock price. That being said, this investment and the recent raise you alluded to should clobber the put skew. http://www.volcube.com/resources/options-articles/what-is-option-put-skew/ http://www.volcube.com/resources/options-articles/what-is-op...
- PaulHoule 10y ago
  One of life's little mysteries is that you almost always lose money if you invest internationally. A friend of mine says it is because the locals know what is going on better than you do. Tencent was a major investor in Magic Leap and the Saudi Sovereign Fund invested heavily in .coms in early 2000. It is definitely not a sell signal, but I would not buy what Tencent is buying.
  - g123g 10y ago
    You should have told this fact to Yahoo management before they invested in Alibaba or maybe to Naspers before they invested in Tencent.
  - edsheeran 10y ago
    Sounds like confirmation bias, also one of life's mysteries.
  - davedx 10y ago
    Citation definitely needed. Most of my investments are in stocks and funds outside of where I live (Netherlands). Guess which parts of my portfolio aren't doing so well? The EU bonds.
  - deleted 10y ago
    [deleted]
  - dkersten 10y ago
    "I would not buy what Tencent is buying." Tencent own a lot of stock in (international) companies that are doing well too. For example, Riot Games, Epic Games and Snapchat. Similar things can be said about Alibaba.
Mikeb85 10y ago
Is anyone actually short Tesla to a significant degree? I can understand the normal hedging positions and daily trading, but shorting a stock with so much positive sentiment is folly...
- marvin 10y ago
  31 million TSLA shares are currently held short, which represents somewhere in the region of 20% of the non-insider shares. (Yahoo finance says 38% of the float, so I guess it depends how many shares you consider freely available on the market). http://www.nasdaq.com/symbol/tsla/short-interest http://www.nasdaq.com/symbol/tsla/short-interest
  - restalis 10y ago
    Petrodollar players doubling-down?
    - erikpukinskis 10y ago
      There are some reasonable bets here. Russia has a vested interest in climate change... their biggest liability is cold and ice, a rise in sea level and 5 degree bump in average temps would give them a much bigger role in agriculture and shipping. Add that to the petrodollars from selling their oil reserves and you've got a game changer for them economically. China probably loses at least temporarily in the runaway climate change event due to destroyed cropland and refugees. The U.S. has exposure on both sides so it's a little more moot for us. We'll lose quite a lot of biodiversity, and may take a big hit to agriculture but we're banking petrodollars and have so much upside when people move to virtual reality we'll be fine. If we were horribly exposed Dems/Reps wouldn't be split on the issue, as clueless as they are. And of course there are the Saudis and corporate/investment petro interests you allude to. Russia/Saud/Exxon vs China with U.S. on the sidelines... not sure who wins there. I really hope we can transition to sustainable energy, but there are big players that stand to gain from delaying it until the reserves are burnt. It's not a bet I would take but I understand why people would bet on there being plenty of feet sticking out to trip up Tesla and co.
- 10y ago
deleted 10y ago
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prolly_a_moron 10y ago
The stock has been stagnant for a long time, and it's still off its high. Shorts have done fine. What's amazing are the longs seeing capital raises at mediocre terms as a wide open positive.
- davedx 10y ago
  Who says the capital raise is a 'wide open positive'? As someone long TSLA I'm not ecstatic. But short of selling my stock, how else can I signal?
  - prolly_a_moron 10y ago
    >Who says the capital raise is a 'wide open positive'? The guy at the top of this thread who said "Shorts can't buy a break". It's at least arguable that these sorts of capital raises are exactly what the shorts are looking for.
- danhak 10y ago
  This was not a capital raise. Read the filing. Tencent acquired most of the shares on the open market and the remainder in the round that was announced earlier this month.
  - prolly_a_moron 10y ago
    >This was not a capital raise. Read the filing. I don't need to read a filing to know that when you create shares out of nowhere, and sell them, diluting current shareholders, it's a capital raise. What else would you call it?
    - danhak 10y ago
      Do you understand that's not what happens when shares are acquired on the open market?
      - prolly_a_moron 10y ago
Afforess 10y ago
This is why you should purchase put options instead of short selling. Exposure to short selling is theoretically infinite. Exposure to put options is just the price you paid for the option. Shorting generally should only be for companies whose solvency is in doubt.
- samfisher83 10y ago
  With put option you pay a big premium for the right for someone else to take that risk. If the company has a high volatility like Tesla you will pay a big premium to buy that option.
- paul_milovanov 10y ago
  Upside insurance isn't free. There's no free lunch.
- reverend_gonzo 10y ago
  This is wrong. You should not be trading options if you only have a directional view of a stock, as you will get eaten alive. Options pricing involves much more than just the underlying stock. Most importantly, as another poster said, there is implied volatility. There is also time risk and interest rate risk priced into the option. With options, you could be right on direction, and still lose money.
  - martinko 10y ago
    If your strategy is to hold them in order to exercise them you do not need to worry about their pricing.
- FeepingCreature 10y ago
  I wish people could buy something like an "implied short", which would basically be an index minus Tesla.
  - Ericson2314 10y ago
    In general, I wish there were safer ways to short.
laurent123456 10y ago
I didn't short the stock but I can understand why someone would. They are expected to generate over 90% of their value after 2020 [0]. There's the expectation that Elon Musk will definitely deliver, that Tesla market share will not be eaten up by other carmakers when they seriously start releasing electric vehicles. The expectation that electric and not another form of energy, such as hydrogen, will dominate, etc. There's a lot that could go wrong and a lot of unknown variables. Then again everything might turn out fine, the point is that no-one know for sure. [0] https://webcache.googleusercontent.com/search?q=cache:UBQtFuwrjtEJ:www.economist.com/news/business/21717421-three-financial-sanity-tests-whether-there-bubble-are-technology-firms-madly+&cd=9&hl=en&ct=clnk&gl=us https://webcache.googleusercontent.com/search?q=cache:UBQtFu...
- spyspy 10y ago
  > when they seriously start releasing electric vehicles They've been "serious" for a long time. Chevy has been selling the Volt since 2010. If they were going to muscle out Tesla they would have done it by now. And it's not just about technology. Tesla has the customer reputation that companies like GM will never have again.
  - Robotbeat 10y ago
    I own a Volt. Best car I've ever driven. GM doesn't care much for it. The only advertising they really do for it basically is trying to steal EV customers from Nissan's Leaf. Really dumb. And the dealers don't like it because 1) they don't know how to service them and especially 2) they almost never need servicing. If you run almost exclusively on electric, you only need like 4-5 oil changes in the entire life of the car. And the brakes last forever, too.
    - vvanders 10y ago
      Yup, which is why any entrenched player is going to have to both build an incredible car and fight against their dealerships to sell it.
M_Grey 10y ago
Over the next year or so, it should be clear if they'll be left in the cold, or very wealthy. Pretty much everyone seems to agree that the Model 3 needs to do well in an unprecedented way (not impossible), or Tesla is in very deep trouble (not impossible). It's hard to imagine the BMW and Mercedes aren't working on things too, and they won't have horror stories of their cars being in the shops for the better part of a year. This is still so uncertain, and I for one wouldn't feel comfortable even guessing, never mind guessing with real money.
enahs-sf 10y ago
meanwhile the straddlers and long haul guys are making a killing right now.

smaili 10y ago

> Tencent is a prolific investor. It holds equity in Snap, this year’s hot tech IPO, among others following an early investment. While that interest in messaging makes sense since Tencent’s operates China’s dominant chat app — WeChat — it isn’t immediately clear whether the Tesla investment has strategic undertones. This was my immediate question as well. Is this purely an investment for its portfolio or is there a strategic element as well? I imagine being able to send/receive messags on WeChat as the beginning of something more.

ihsw2 10y ago
Having access to the internals at Tesla is interesting and potentially powerful -- significant ownership share brings many benefits that are by no means small. Albeit on a need-to-know basis and through a peephole, it is nonetheless advantageous. It may cost $1.7B but it guarantees continued access, whereas throwing technical exfiltration (ie: hacking) and manual exfiltration (ie: mole in Tesla staff) whose resources are limited and unpredictable. It's also a good financial investment.
- erikpukinskis 10y ago
  Can you explain what kind of access you mean? I thought preferential information sharing with specific investors violated SEC rules?
  - chillydawg 10y ago
    not if they have board seats
    - mtgx 10y ago
      Yes, that's the real question. If Tencent obtained a board seat as well, then I could think of all sorts of scenarios that could benefit Tencent in China, but not necessarily Tesla.
  - deleted 10y ago
    [deleted]

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turingbook 10y ago

Smart move. Tencent's investing but not controlling strategy make it good supporter of the new generation of ambitious entrepreneurs against AAAAF(Apple Alphabet Amazon Alibaba Facebook): - JD - Didi - Snap - Meituan-Dianping ……

yeukhon 10y ago
I am not following. Who are the new generation of ambitious entrepreneurs?
- tzakrajs 10y ago
  I guess Elon? He's no spring chicken, but certainly ambitious and an entrepreneur.
  - yeukhon 10y ago
    Okay, but that's kind of an unfair comparison since Facebook, Google are corporations. Elon is a person. But if the point is tech founders should actively invest on their own outside of their company, okay that's fair. I am not sure how often Jack Ma, Mark Zuckerberg or Jeff Bezos invest in for-profit companies outside of their company's investment arm, but I think they do.
bpicolo 10y ago
> but not controlling strategy I mean, they bought all of league of legends. Their primary driver is most likely "let's make money".
- turingbook 10y ago
  Games are Tencent's backyard and cash cow.
  - epynonymous 10y ago
    not entirely true, i imagine wechat is a huge advertising platform for the as well.

11thEarlOfMar 10y ago

I see this move as a blessing for Tesla to gain market share in China. The stock is valued for growth far into the future, and achieving that outcome is really iffy without a robust China market. [edit] I'm speculating, but I don't think TenCent could have gotten as big as it has without the blessing of the Chinese government. That is the basis for my view.

devy 10y ago
> I see this move as a blessing for Tesla to gain market share in China. Yes, and Tencent is betting on it, since Tesla Chinese market sales has just broken $1B [1], soon Chinese market will be Tesla's biggest market with Chinese government's policy leaning on supporting EV industries in a MAJOR way. Win-win! http://fortune.com/2017/03/03/tesla-one-billion-sales-china/ http://fortune.com/2017/03/03/tesla-one-billion-sales-china/

txmx2000 10y ago

I only need Twocent to know this is a bad idea.

sidcool 10y ago
Why?
Markoff 10y ago
still better and less risky than keeping money in free falling RMB

icantdrive55 10y ago

I think they knew solar is the future, all around the world. China has massive pollution, and most homes/businesses that have access to direct sunlight. (Yes--I know solar works 50% on cloudy day. It doesn't work well with a lot foliage coverage. China looks barren of trees--sadly.) My hope is those solar tiles come down drastically in price. My hope is the average roof will be cost effective to put said tiles up. I think those solar tiles will be Tesla's Trump card. It will probally be in four years, or more in the United States. We will need a new president. (I was for Trump putting Coal miners back to work, until I found out the problem is not regulations, but automation. Actually, I want clean air. We need a better way of supporting people affected by the elimination of old ways of doing things; like a Basic Income.). Sorry about being all over the place, but there are no simple answers. Trump is just finding this out. I think Tencent saw a long value in the stock, even though their citizens will not likely buy Tesla's tiles. They will buy the cheapest knock-off as usual, but the rest of the civilized world will buy Tesla's product. (I don't know what patents are on these new Tesla tiles, but I bet they are seen as a valuable commodity, even to a cheating society like China.)

camflan 10y ago

They should've bought 10%...or change their name to Fivecent

Le_SDT 10y ago
I think puns in the comment section belong to reddit
- hyperbovine 10y ago
  What, we can't have puns now? Lighten up.
- hanspeter 10y ago
  I came here for this pun. I also knew I had to dig it up from the bottom.

woodandsteel 10y ago

I suppose the administration is going to argue this move supports Trump's claim that global climate change is a Chinese plot to undermine the American economy.

intrasight 10y ago

Funny. Just yesterday I commented on an HN thread that my first electric car would likely be Chinese, but that it might have the "Tesla" name on it.

deleted 10y ago

[deleted]

vit05 10y ago

Is this showing that they haven´t found a Chinese company that could compete against tesla? China is investing a lot in Solar energy, batteries and have car companies that want to become global players, and most of Tencent investments are on Chinese companies that make products focused on China and Asian markets. I do not know if they buying in open market tells more about Tesla potential or about China future in cars and energy. https://www.crunchbase.com/organization/tencent#/entity https://www.crunchbase.com/organization/tencent#/entity

shawn-furyan 10y ago
A $2B investment doesn't really preclude other similar future plays for a $200B company. So I think there's not enough information to draw that sort of conclusion.

dmix 10y ago

Tesla recently announced they are ramping up their Model 3 production even more than what some people thought was already optimistic numbers: https://www.bloomberg.com/news/articles/2017-03-27/tesla-model-3-ramp-up-aims-to-crush-bmw-and-mercedes https://www.bloomberg.com/news/articles/2017-03-27/tesla-mod... > For Musk to hit all of his targets, Tesla would need to build about 430,000 Model 3s by the end of next year. That’s more than all of the electric cars sold planet-wide last year. > Even if half of the Model 3 inventory shipped to other countries, 2 U.S. sales under Musk’s targets would outpace the BMW 3 Series and the Mercedes C class—combined. > To sell that many $35,000 sedans in the U.S. “would be absolutely unprecedented based on what we know about car markets today and how people spend their dollars,” said Salim Morsy, electric car analyst at Bloomberg New Energy Finance. “It could happen. I’m pretty sure it won’t.” If they could pull this off this might be a great investment by Tencent. It's also great for the car industry and environment as well. Especially considering their work on automated driving. If they get that many cars on the road it would give them a ton of data and a big advantage/lead in AI over other companies. But it could also be setting the bar too high and setting them up for failure (even though they might otherwise have nailed targets). Regardless, as a design fan it would be interesting to see so many Teslas on the road. They are great looking cars.

aphextron 10y ago
> To sell that many $35,000 sedans in the U.S. “would be absolutely unprecedented based on what we know about car markets today and how people spend their dollars,” said Salim Morsy, electric car analyst at Bloomberg New Energy Finance. “It could happen. I’m pretty sure it won’t.” Model 3's will sell literally as fast as Tesla can push them off the production line. The pent up demand for this thing is insane. Over 400,000 people have already paid $1000 deposits on their cars. The only thing that could possibly stop Tesla is their own inability to deliver.
- hueving 10y ago
  Or withdrawals from people. The deposits are non-committal so people can cancel without losing anything.

Digit-Al 10y ago

Shouldn't they have bought ten(per)cent?

Kiro 10y ago

Tencent's reach is mind-boggling: https://en.wikipedia.org/wiki/Tencent#Investments https://en.wikipedia.org/wiki/Tencent#Investments

ge96 10y ago

I thought I saw TenCent's name in Kong Skull Island

ge96 10y ago
Ahh I guess they're not connected tencent pictures and tencent

matthewhall 10y ago

I have a bad feeling about this...

umeshunni 10y ago

Worth noting that Tencent is also an investor in Future mobility which has been remarkably quiet since their funding announcement last year: https://www.crunchbase.com/organization/future-mobility#/entity https://www.crunchbase.com/organization/future-mobility#/ent...

Proven 10y ago

Haha, lunacy! Tessa is crap.

bigiain 10y ago

When I first read this, my head saw "Fifty Cent"... And I thought "A _rapper_ has just bought $1.7billion worth of Tesla shares???" and was all ready to make "Has Tesla already become the Cristal Champagne of car brands?" gags... Still, half a billion return in two weeks on a 1.7 billion play is pretty nice money...

elgenie 10y ago
Fifty Cent got a minority stake in Glaceau instead of a payment for endorsing their Vitamin Water. When Glaceau sold to Coca-Cola, that equity was worth somewhere in the neighborhood of $100 million.
- broodbucket 10y ago
  Pretty sure 50 is bankrupt now.
  - reanim8ed 10y ago
    > Pretty sure 50 is bankrupt now. It was fake: http://www.dailymail.co.uk/news/article-3470122/He-s-far-broke-Bankrupt-50-Cent-64-MILLION-assets-10-million-checking-stocks-earning-184-000-month.html http://www.dailymail.co.uk/news/article-3470122/He-s-far-bro...

BlytheSchuma 10y ago

Now I can get free legendary skins with purchase of a model 3? What time to be alive.

andy_ppp 10y ago

The Model 3 will come with full automation and an Uber competitor. Just a guess why they are so confident about hitting their numbers.

koreyb 10y ago

When did it become cool to write poorly like Trump? Or vertical integration..as well as protecting Elon's investment by bailing out SCTY. It was $3.25bn because they held the note on leased systems. Under TSLA they shifted to selling solar shingles outright.

radiorental 10y ago
> When did it become cool to write poorly like Trump? That's just low. First, I'm dyslexic. Second, I was on my new mobile with a new keyboard. Please refrain from turning HN into redit.
- koreyb 10y ago
  It would be low if I knew you were dyslexic. Your other writing is spot on. Was looking for discussion on the topic instead of someone acting like a victim.
  - radiorental 10y ago
    A discussion on the topic... Of whether I write like Trump? I'm sorry,am I missing something?
    - koreyb 10y ago
      Only the other 2 sentences in my post. Off subject, you may find this cool https://youtu.be/cfRqNAhAe6c https://youtu.be/cfRqNAhAe6c
      - radiorental 10y ago
        Thanks! Some very cool stuff in the pipeline from Nissan. I'd be wary of these controlled demos though, it's a tougher problem in the real world. I think the path forward are 3rd party units like the PX2 from Nvidia https://www.youtube.com/watch?v=-96BEoXJMs0 https://www.youtube.com/watch?v=-96BEoXJMs0 Apple, Tesla, Google & Baidu have sucked up all the talent. That's pushed out development timelines for automotive manufacturers like Nissan beyond someone like Nvidia shipping an off-the-shelf solution.

Markoff 10y ago

this just shows how distrustful are Chinese about their own currency that they seek any way to store money abroad in safe harbor away from RMB and Chinese government