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Are you a Teslanaire?

http://www.mercurynews.com/business/ci_23912622/how-teslanaires-made-for...

How 'Teslanaires' made fortunes on Tesla Motors stock
By Dana Hull dhull@mercurynews.com San Jose Mercury News Posted: MercuryNews.com

In June of last year, Patrick Hop poured his life savings -- $30,000 -- into Tesla Motors (TSLA) stock, then trading at about $32 per share. When the stock hit $115 this July, he dumped all his shares and invested in options on Tesla stock, which are high-risk bets on the stock's future performance.
Now Hop, a 22-year-old senior from Millbrae studying applied math at UC Berkeley, estimates he's made about $250,000 -- at least on paper.
"I have a high risk tolerance, but I don't think the stock is that risky," he said.
Hop is far from alone in being bullish on Tesla, which has developed a cultlike following not seen since the early days of Apple (AAPL). The company's stock has skyrocketed nearly 300 percent this year thanks to a string of successes, from a rave review in Consumer Reports to better-than-expected sales of the all-electric Model S sedan and, this week, five-star safety ratings in federal crash tests. The Palo Alto-based electric-carmaker, whose stock closed Wednesday at $147.86 per share, now has a market cap of about $18 billion, and some analysts say shares could double again within the next three to four years as Detroit races to play catch-up.

Along the way, scores of individual investors have placed heavy -- and extremely risky, many experts would warn -- bets on Tesla's stock, which is one of the most volatile on the Nasdaq.
Some bought Tesla stock as a way to finance their purchase of the Model S, which has a base price of $70,000. Many are convinced that Tesla is the next big growth stock, like Apple or Google (GOOG), and they don't want to miss out, pouring their life savings into the company against the advice of family, friends and financial advisers.

The Tesla Motors Club forum, an online bulletin board for Tesla owners and fans, is filled with posts and message threads about the "Teslanaires" -- those who have realized $1 million in paper gains through Tesla stock trades.
"There is a bull market in Tesla right now, but don't confuse a bull market with genius," warned Manny Schiffres, executive editor of Kiplinger's Personal Finance Magazine. "As long as Tesla keeps going up, people will think they aren't vulnerable. A year ago Apple peaked at $705; now it's around $500. You should never put a disproportionate amount of your wealth into one stock."

Many Tesla investors, like Hop, engage in options trading, which involves pledging to buy or sell stock at a specific price by a specific date. Timing is everything, making options trading a risky bet that can rack up big gains or gut-wrenching losses.
"Options are derivatives," Schiffres said. "You have to be right on the company, the direction of the stock and the duration, because options expire. It's very much like being in a casino. Trading options is pretty much like gambling."
Financial consultants typically advise against heavily investing in one stock, yet it is advice easily ignored by Tesla fans like Rod Stelling, a 69-year-old retired microbiologist who lives in Napa Valley.
Stelling paid $40,000 to reserve a Model S three years before the car was built, got the 64th vehicle off the Fremont assembly line, then promptly had it custom-painted chocolate brown. He has "100 percent confidence" in Tesla and says that two rides in the Model S are all it takes to be convinced that CEO Elon Musk and his executive team know what they are doing.
"As soon as I could buy stock, I bought stock," said Stelling, who got in close to the IPO price, which was $17 in June 2010. "My brother-in-law is still convinced they are going to fold. My money manager thinks I am crazy. He says we should diversify, but I'm not going to do that. I've made $250,000 on this. My car is paid for. Of course you haven't really earned anything until you sell, but I'm holding on. The stock may go over $200 this year."
Another Tesla bull is Jonathan Jivan, an Iraq War veteran who lives in a suburb of Akron, Ohio. He describes his lifestyle as modest: He works as a videographer at Kent State University and drives a 10-year-old Nissan Altima.
But Jivan purchased $2,500 worth of stock in Tesla Motors in April 2011, when it was trading around $25 a share. In January of this year, when it was trading in the $30 range, he invested another $5,000. Now Jivan has seen his original investment balloon to more than $100,000.
"I just had a hunch that electric cars would be the future," said Jivan, 30, who spends countless hours researching Tesla. "Back in January, I knew Tesla's stock was going to go up because they were saying they were going to become profitable. When companies become profitable, the stock always explodes. That's the point where people realized that Tesla actually knows what it's doing."
His biggest splurge so far: a new LCD television.
"I've made twice my yearly salary in six months," Jivan said. "My wife doesn't even know how much money we have."
Kevin Weng, 40, a software architect who works in Palo Alto and owns a Model S, invested a significant chunk of his self-directed retirement account in Tesla when it was trading at $35 a share in March and now is a member of the Teslanaire club.
"I spend a couple of hours a day researching the company," Weng said. "Sometimes I get up at 4 or 5 a.m. just to read about the company and then think about how I want to manage the trading that day."
Bob Gotchall wanted to buy a Model S but couldn't justify the cost to his wife. So he figured that if he invested $50,000 in the stock and doubled his money, he could then afford to buy the car.
"I figured if the car was a good buy, the stock was an even better buy," said Gotchall, 40, of Austin, Texas. As the stock began to rise, Gotchall started adding more and more Tesla options to his portfolio. "I started to have days where my balance would go up by $10,000. I sold and bought, panicked and re-bought and watched a ticker way too much during the day."
Gotchall recently had to come clean with his wife.

"I said, 'I don't want to alarm you, but we have hundreds of thousands of dollars more than we did last week,' " he told her in May, after Tesla reported its first quarterly profit in 10 years.
Gotchall, who on some days now is a Teslanaire, said the good days for Tesla are far from over.
"The stock is still totally cheap," he said. "It's a growth stock. Buy the stock in a retirement account and just let it go."

Hardly a Teslanaire but I did profit enough to pay for my car twice over.

Nobody quoted in the article was a Teslanaire. Everyone seemed to have made $100,000 or more though.

Not a Teslanaire by a longshot. TSLA did buy my SP & added solar panels (on paper). I would have made more if I hadn't sold some shares at 97. You never really know till you cash out.

Musk is. He borrowed $30m from goldman sachs to buy shares quite a while back. For me, I've made a good amount but not enough for a 60kWh version yet. Its become too risky to invest in right now. Sales dont seem strong enough for a long term investment, only day trading.

@bonaire
"It's become too risky to invest in right now. Sales don't seem strong enough for long term investment, only day trading"

I am 180 degrees from you in strategy. TSLA is an excellent long term investment with continued short term turbulence. Day trading is gambling against a stacked deck IMHO.

Tesla along with the Elon has all the brains, technology and capital to disrupt the ICE auto economy. It become the dominant auto company.

The simple design of Model S, X, GenIII, etc enables the use of automated manufacturing. Economies of scale will drop costs significantly. Supply chain costs will drop with volume. Battery tech is improving and $/KW-hr is dropping, while energy density is increasing... and we may get a 500 mile range in a couple of years.

With the cost/charge <$10 at home, and supercharger network, the potential disruption is significant. So far Tesla has not made significant mistakes.

Who do you want to bet with? Shorts? Dimwit Detroit auto manufacturer, etc? Or with Elon Musk and Tesla?

If the stock goes to 600 I will be....

pleased :o)

I felt like a teslanaire when I owned my first share.

My Tesla investment strategy is buy low sell never. God willing, that means that I will leave my children two great things. A cleaner planet and a piece of the company that started the EV revolution.

@Porfirio

And a used MS with hundreds of thousands of miles that's still almost as good as brand new 8-)

Didn't make a million. But certainly tripled my measly portfolio. I thought it might take 10-15 years to get the kind of gains I've achieved.

Not kidding, I literally made my first ever trade July 7th, 2012. Guess what it was? :)

Shortly thereafter I put in about 60% of my portfolio. People thought I was crazy. I thought I was crazy. I should have done 100% hahaha...but that was quite the serious crazy talk.

My goal was to own a home. Goal...maybe not the right word. It was but a dream back then, and I still was prepared to wait 15 years. Today I have to decide which home I want to buy!!!!

I do admit I've cashed in most of my shares, I only have about $15,000 in TSLA now. That's a lot of money for me, lol. I'm still holding hoping it gets to $1000/share in about 20 years, so I'm in it for the long haul. Dream achieved.

Thanks for another pat on the back, it's nice to think about May 2013. I'll always remember. Thanks TSLA, and of course all of you lovely people here on Tesla Motors forum. Seriously, thanks because I might have pulled my money out sooner hahah!!!!!

Cheers!

Cheers to jonesxander!
The only Teslanaire quoted in the article is Kevin W., and that is me :) See me more in teslamotorsclub.com.

And I know there are quite a number of Teslanaires there.

From the IPO, approaching a 10-bagger already.

Buying Tesla stock in the $30's is quite a different matter buying it in the $150's at today's prices. People that are putting their entire net worths into ONE stock are foolish.

I don't care what potential the company has, the need for common sense and diversification should never be forgotten.

well said
if looking at 2,000 shares
taking a flyer for 60k is much different than taking one for 300k.

@THEKING & @Earlyretirement

Either the stock is fairly valued for it growth potential or it's not.

The company has a "generous valuation" given it's current revenue.

It also has the potential to generate double or quadruple the number of cars it made this week without spending significant CAPEX.

How should it be valued when Chinese cars and EU cars are being shipped?

I'm not an expert but I find that most people are just discovering the product and the stock. The company has a lot of room to grow.

PorfirioR |
"I felt like a teslanaire when I owned my first share.

My Tesla investment strategy is buy low sell never. God willing, that means that I will leave my children two great things. A cleaner planet and a piece of the company that started the EV revolution."

My sentiments exactly. If I cashed in, I would have enough to buy the car and still have a little left over. I bought in when stocks were selling in the $30 range. Neither stockbroker was familiar with Tesla at that point. I bet they are now! To see it close to $160 today is thrilling. I don't want to sell, but I do now want a beautiful story and a half garage covered in solar panels so that I will be carbon-neutral and have an apartment to rent out for future income. Decisions, decisions.

SamoSam,

No doubt there is tremendous room for growth, but much of that is already priced into the stock already.

The biggest problem I see is people don't really understand the fundamentals of valuations and think the stock can only move one way. I've seen the same thing over the past many years with various things. Commodities, housing, stocks, etc.

I'm not saying that Tesla might not continue to climb. Sure it could. But all I'm saying is it's NOT wise not diversifying and basically gambling on one stock. That isn't wise and anyone that tries to argue that it is.... well is ignorant.

Hopefully no one is buying stock as a way to afford the car. Buy car if you can afford it, buy stock when you feel it's appropriate. Keep the two transactions separate. You will love the car, it is a great and very unique ride. You may make money on the stock, you may time it poorly and lose money. The stock will go much higher in the next three years, it may go down some first.

If TSLA gets to $300. Half way there just have to have the guts to ride out the downs as well as the ups. I believe it can get there if TM can fix supplier constraints. When E gets 'car of the year' $300 is possible.

I have quintupled my money, but unfortunately, that still leaves me in the 5-figure range. If only I had the guts to put my entire 2012 bonus into the stock...

"Hopefully no one is buying stock as a way to afford the car. "

jonlivesay: That's exactly what I'm doing. I would never choose to spend >$50k on any car, but really wanted a Tesla. So I invested in TSLA back in Feb at $35. If TSLA is >=$155 next Feb after 1 year capital gains holding period I will buy a Model S, pay the capital gains taxes and still have the cash from my initial investment. If TSLA goes down, I may wait for a Model E or consider the BMW i3 instead.

So yes investing in TSLA stock is exactly the way I'm justifying affording the car.

This whole concept is comical on the Internetz. Anybody is going to chime in and tell you what they bought it for and sold it for and how many thousands they made. Most of it is BS.

It's like guys that gamble in Vegas all the time. They'll tell you about sitting down with 5K at the blackjack table and making 25K in two hours but they'll leave out the stories about losing 5K in 20 minutes.

Same here. Ok, I'll play along.

I bought $100K worth of Tesla stock at $82 and sold at $140. I made $71K and essentially nullified the price of my Model S. Free car.

See how easy that is?

JoeHuber that's your choice, not mine. Wish you the best of luck, let me know how it goes. TommyBoy. Some peoe talk and some people don't who cares? Do your thing, do it your way, enjoy the ride

All I can say is that some days I kick myself for putting 100K into buying my Model S instead of TSLA stock when it was ~$30 a share. I would be half way to a Teslanaire or been able to buy 4 MS with the profits. However, when I drive my P85 and hit the accelerator hard, all this anguish dissipates and becomes a long lost memory.

@mdemetri,

That's how I felt about the $5000 deposit I put down in January when the shares were under $50.

TommyBoy,

Tesla has risen so rapidly over the last two years that while you COULD lose money on it (John Peterson), you'd have to work really hard at it (again John Peterson).

A good option would have been to just buy and hold. If you know what you're doing, you could be a more active trader.

Trust me, you don't need to pay attention to who make some tidy profit here and there from TSLA. The stock has risen 4x in under 5 months. One has to work extremely hard to lose money. Anyone who has a bit of luck or impulse to invest on TSLA can earn a free Model S.

But for those who invest big and make it to a Teslanair, it is a different story. Who would be so naive and reckless to risk so munch money like gambling in Vegas, if there is no reasonable high probability to making the profit? It is a different vision those guys are seeing. Being one of those, I also need to work extremely hard to make sure if the sky is falling, the fortune does not vaporize.

Just a bit to add to the article. The worst thing your can get out of this article is you simply need to be lucky and bold enough to bet.

"bold enough to bet" sorta sums it up. Someone, e.g., who can't afford the car unless they make a "killing" on the stock would hardly be irrational to invest as much as they could afford. Different people have different "payoff/risk gradients".

If you have concluded that TM has lots of corporate long-term upside, playing to make sure you're in on any potential 10+-bagger is quite logical. I note that TSLA is within about $10 of being a 10-bagger from the IPO level!

I tried to set up an account to buy call options at the $22 level, but couldn't swing the credit line. I try not to think about it too much!


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