Tesla strategy, reflections and TSLA in 2019 to FB in 2012 parallels (EA, QCOM and other updates too)

Things got really interesting in the Trading With Cody Chat Room today as worries and even anger about Tesla going down a few days after we started buying it and I have been calling it my favorite buy right now — and that’s got some people upset.

Here’s most of the wide-ranging and smart conversation about Tesla, Qualcomm, EA and the whole approach of Trading With Cody from the Chat Room today.

Vincehap1: Cody, How would you play TSLA on it’s earning report? Should we be buying into weakness?

smoconnell: TSLA Q1 earnings were as follows. Revenue was $4.54B, below a $5.42B consensus. Non-GAAP EPS is negative $2.90, below a negative $1.15 consensus. GAAP EPS is negative $4.10, below a negative $1.81 consensus. Reiterating prior guidance for 360K-400K 2019 vehicle deliveries. Targeting 500K in 2020.

mikey3: SO $TSLA COMES IN AT 400% bigger loss that WS estimated – so how is the stock not down $75?

smoconnell: Makes you think the market was really expecting a total disaster

mikey3: I mean, really was this “Priced In”????

mikey3: Or maybe just a delayed reaction? Or short covering?

mikey3: Or is it just all about the guidance – and if the guide is unchanged, then who cares what they lost?

smoconnell: Who knows- with all the hype around this name in both directions, it’s hard to know what’s driving the price action

mikey3: In the meantime, $FB and $MSFT are +9% and +3% respectively.

mikey3: $GOOG and $AMZN piggybacking

mikew29: This is when I’d like Cody to be present and at least give feedback on a wild earnings day. Instead he said be back in a minute and never came back!

Cody: TSLA looks fine. Be cool.

Cody: FB terrific.

carl: Why do you think that TSLA is fine? Is the bad news already priced in? Is the real point that TSLA’s price is at a low point already and that it might make money in the next few years? I have no idea how much of a crapshoot it really is!!

mikew29: carl: agreed this stock makes me nervous. More so than any other stock I’ve owned for years. I used to think TSLA was overhyped and overvalued. After Cody gave his blessing and buy announcement I bought some. Then when he said Tesla was his number 1 stock right now, I bought more. My position is making me uncomfortable. Considering the fact that the stock had bad earnings and so much volatility surrounding it.

kc: The wedbush Tesla downgrade isn’t very optimistic. Cody, can you also comment on Altria’s earnings miss? Thank you.

carl: mikew29: Personally, I think that Cody sees two things (1) the short term-face it, TSLA is at a low point. Musk is a good salesman with a willing audience. There is a good short term opportunity here (2) long term, i.e. 5 years. There is a market (the rich) for a car like this in spite of what I think is the hype. TSLA is at a low point. Me? I think that it is a **** shot. If I go in it is for a short term bounce. Mario Gabellis likes future ev parts suppliers like Dana and Genuine Parts. OK, crapshoot not crapshot or just plain ****.

mikew29: carl: Typically Cody gives technical/fundamental analysis for buying/shorting something. Being cheap is all relative. A 250 price stock that is losing money may not be that cheap. You have a manic leader in Elon Musk that typically over promises and under delivers. Cody sent a lengthy email based off of what owners thought. Even if every owner loved the car, still doesn’t mean Tesla will be profitable. Several analysts came on CNBC to say this was the worst reported quarter by anyone reporting in years. Additionally, the tax breaks people have been receiving to buy the cars will no longer be applicable. I don’t see any reason to own this company, Ford and Amazon teaming up with Rivin to compete. They can’t be profitable or meet any deadlines without competition!

mikew29: Yet, it held 250 and looks bullish…go figure lol

gvn2fly: TSLA gonna have to do an offering, no?

Golfcar101: mikew29: Agree on what you said on TSLA have not or will not own. Musk is a wildcard CEO seems to always need to be in the spotlight

Golfcar101: Seems Cody likes revolutionary stocks as he always said TSLA cars appeal to a few not most. Electric cars and rockets no thanks.

mikew29: gvn2fly: Sure seems like they will need to raise cash. I bought it and sold it today at 255. Made me uncomfortable.

Gambler15: Funding secured? Oh, wait

jckptrs: Tesla is HATED now, just read how uncomfortable many are here (nothing wrong with being uncomfortable, lots of reasons to justify). Flip side, where do we see them being in 5 years?: if one feels that is bankruptcy or no better off, by all means do not invest, but if one sees the company doing even half of what he says, that is 10x better than any other company on batteries, supercharger network, full autonomous featured, they will not be caught within next decade. good head start to me

MikeM: FWIW, I initiated some TSLA at $249 today. I like to follow Cody’s optimism and he is quite optimistic about TSLA at this time. He is usually right and I will follow that track record, especially with his optimism. DELL was a similar play and very hated a couple months back when Cody tranched into and that is up 50ish% now from there. Whether an investment in TSLA is a success only time will tell. I also added a bit of SNAP here now.

mikey3: $TSLA has now hit a five-time bottom at $250. It has held there for many tests. And it has held today so far.

mikey3: Looking at $TSLA earnings is like looking at $AMZN earnings for the first 20 years it existed. They were awful and non-existent.

jckptrs: How many here would like to own AMZN, APPL, FB again at some of their lows? We will all say YES, but remember those companies all were being heavily questioned about their competency, not being seen as revolutionary at those moments. Some people saw through the news and potential issues to the more important trends they were creating. I would rather buy a company that is well off their highs that is revolutionary, than something that’s overpriced on all traditional metrics but that is me, do not buy it if uncomfortable, or own less if that makes it more palatable, but there are 50 billion dollars worth of belief in this company and man. No person is more directly impacted by poor performance then he is. That’s a pretty good incentive to achieve his crazy ideas and yeah, I’m pretty confident if he can RE-LAND A FRICKEN ROCKET that even NASA couldn’t do, he has a pretty good chance of making this company do the things that everyone doubts is possible.

lfnunnally: I too nibbled some TSLA at 249.00

drcraig: Bought a first tranche of TSLA at 250.10.

Golfcar101: jckptrs: What happens when the federal subsidized money goes away? For me I am not for hand outs of tax dollars those who want one buy it with their money. Let’s see when the free money disappears. I think someday electric cars will be popular but not for a long time just my opinion though.

FrustratedBull: Bought more TSLA and a small bit of SNAP. Want to dump MO – I despise big tobacco and the play on cannabis seems to be such a small part of their $95 billion market cap business. Really resisting selling it until I see what Cody is/is not doing.

mikey3: Totally agree re: $MO — would love to hear Cody weigh in on this one. I already own enough $TSLA (maybe too much) and I am not a believer in $SNAP so I sold mine before the recent drop.

jckptrs: Golfcar101 – Hasn’t the subsidy already disappeared or reduced down to almost nothing? That’s the reason for the sales miss. Everyone bought the car before it was rolled back. So we now have that scenario playing out for us these next few years. Wealthy people who can afford a 80k car don’t deserve subsidies but if it allowed the company to become what it is, (and change an industry that is stubbornly antiquated) that’s a great public/private partnership. Not enough examples of that. I fully respect others not believing in Musk, his timeline, or Tesla’s crazy ideas. The company needs to stand on its own, creating desirable products that the masses want. I think it can and will, as it is moving the bar of what an automobile can achieve. Just think where this company was 10 years ago, the ONLY reason the industry is changing is because of Tesla. Imagine where it will be in 10 more. As Musk said, there is no car on market that can touch the 2012 model S.

Golfcar101: jckptrs: We just don’t agree but that’s ok it makes a market so if I get what your saying its ok for the govt. to fund and help a private business get off the ground at taxpayers expense. If I remember would need Cody to chime in but he doesn’t like all the govt. handouts but that’s another topic i guess.

jckptrs: Golfcar101: Nah, the government has a long storied history of making almost anything they touch more complicated, more bureaucratic and more expensive. I am not saying they should have helped, but the reality is they DID and IF it helped keep them afloat that has a benefit to the productivity of society (driver-less) and the globe (less greenhouse gas). Now, we need to discourage them from doing it again, even a blind squirrel finds a nut sometimes. Greenhouse gasses being = Smog, pollutants that cause breathing and health issues. America being thankful Los Angeles and other large cities are not like Beijing and Shanghai where masks are worn continuously. I think I miss the good old days when the only reason to wear them was, hospitals, Halloween and bank robberies.

mikey3: Now that $TSLA has broken through support, I have liquidated all my positions, including call options and common. The next support level is probably in the $225 area. We’ll see if that holds and maybe with buy back in. At this point, it’s just not worth the risk-reward to hold on. Hope I’m wrong! Usually when I sell it’s a great BUY signal, so — FYI! Used the proceeds from my $TSLA selling to buy some more $MSFT. I think the risk-reward there is much better.

farokha: I think Cody has TSLA has 3-5 yr play and more than a car company. I wouldn’t be surprised if smart money is accumulating shares here

Cody: BTW, The use of electric vehicles is growing at a strong rate. It is 2.1% market share of new car sales in 2018, up from 1.3% in 2017, and 0.86% in 2016. And who’s got the most EV market share, of course? https://cleantechnica.com/2019/02/09/tesla-model-3-1-best-selling-electric-car-in-world-7-of-global-ev-market/

Furiantx: TSLA/FB: Hey Everyone. You have to realize that the return on your whole portfolio is what matters most….not if every single stock pic goes up. There is no way Cody can get all of his pics correct….or anyone for that matter. For ex: Today: FB is up, TSLA is down. If you have a 5% position in each one. FB is adding more value vs TSLA’s losses. Cheers!

stevekim1: Agree: “You have to realize that the return on your whole portfolio is what matters most….not if every single stock pic goes up.” Moreover, every stock pick has to be judged over time, instead of what happened today or tomorrow. I would think most of us are here are long term buy and hold types, so I frankly don’t spend a lot of time worrying about what happens after earnings, or frankly most other times, but take comfort in what TWC shares with us.

Cody: Regarding FB vs TSLA, here’s an even better thought. Remember this from June 2012 when FB was at $20 down 30% in a straight line from its IPO and down 15% from where I’d just started buying it: Cody Willard: Why I’m the Idiot Buying Facebook Cody Willard on The News Hub explains why he’s one of the few people right now buying Facebook shares.

Cody: TWC Chat Room July 25, 2012:

“Q. What’s your feel on the Facebook earnings tomorrow? Anything meaningful to take from it as its first quarter as publicly traded company? Or no matter what, its just the beginning? Even though it has 8-900 or so Million users already, so it’s not a new company anymore?

A. I don’t know quite how to game what the market will be looking for in the first ever FB earnings report, but feet to fire, I’d guess that mobile revenues will be the biggest catalyst unless the earnings themselves are just so far away from consensus as to truly be shocking. Given that my analysis for FB is looking out into 2013 and 2014 for my reasons to own it, I’m not sure there will be much for me specifically in the report, other than to learn more about the company itself.”

Cody:  Same thing can be said for TSLA today, just change 2013 to 2020 and change 2014 to 2021: ” Given that my analysis for FB is looking out into 2013 and 2014 for my reasons to own it, I’m not sure there will be much for me specifically in the report, other than to learn more about the company itself.”

Cody: August 1 2012:

“Q. There seems to be a great deal of very strong opinion regarding Facebook, its relationship with Zynga, its ability to monetize its business, etc. There is also some discussion about the additional stock that will be available for sale this month and the possible additional pressure on the sale price as a result. Meanwhile the stock seems to be in a tailspin, going down every day. I have placed a fairly sizeable bet on this stock and the pain is getting to be significant. Have we bought too soon? What would be the best strategy long term from here?

A. I also feel your pain and I am so mad at myself for not having had more patience before initiating this FB long. I always pointed out that this stock could easily fall from our buying prices every time I bought it, and indeed it has. I am biding my time as I don’t know where it will bottom and I don’t want to be overly aggressive any more than I have been in FB already. I do think FB will have a whole lot of upside in coming years, but discipline trumps conviction. I plan on buying more FB common and long-dated calls in coming weeks and months but I won’t let myself rush it.” http://tradingwithcody.com/2012/08/01/cody-kiss-tell-cody-runs-for-president-and-other-true-stories/

stevekim1: Cody: Enough about 2012 FB. I was a subscriber back then, and so sick about FB dropping to $20 after the the $38 IPO, that I could not bring myself to “load up” on FB when you were telling us all what a great time it was to buy. I am getting PTSD flashbacks from all these reminders. With that said, I wish I had loaded up on FB when you were all over it at $20.

stevekim1: I picked up a couple of TSLA 1/2020 $250 calls today, just for fun. Feeling quite contrarian, am I.

daisym: Cody: I agree that your playbook rocks, also a keen follower over some years now, rare trader but I’ve benefited from great trades in recent months which have me able to feel comfortable about fluctuations with tesla . I feel you gave a good heads up about staying cool through possible spectacular earnings miss, and I love love love that I’m finally starting to feel a taste of that sangfroid

Cody: Haha, thanks for the kind words. Sangfroid now added to my arsenal of cool words to hit people with.

farokha: TSLA no doubt will be a winner…lot of bad news being thrown out there to shake out longs

joeylfry: Hi Cody. First time participating in this chat room. Thanks for all your diligent work. Could you please provide some insight into your selling of EA. Did something change in your original thesis in the short interval between your initial recommendation and your decision to throw in the towel? I purchased the day before your sell recommendation because I saw the dip as a good entry point. Thanks again.

ricma66: Hi Cody, I’ve been following you for many years and I’m a proud subscriber 4life. However, I’m a bit concerned about the change in trading style since you started the hedge fund. I used to appreciate a lot the calm and long term style of investing you preached; since the start of the hedge fund, this style has changed a lot or at least I’m not able anymore to understand what is your trading in the fund vs. your investing in your personal portfolio. (EA latest example of this trading, add more one day, get out of EA just a day later.) Would it be possible to separate what is your hedge fund trading from your personal investing? Personally, I would be interested only in what you do with your personal portfolio, like it was before, and avoiding all the trading in and out of the hedge fund. Sorry Cody for touching on this point but just wanted your view on this because it goes to the heart of the actual philosophy of investing vs. trading that you help me so much with and made me a happy and satisfied Cody follower for so many years.

lfnunnally: ricma66: good post – I agree

Golfcar101: ricma66: Also Agree

mikew29: I agree with everyone’s sentiment. Hard to know what Cody is doing between investing and trading. As he’s busier with the hedge fund and family issues, we get less attention. During these critical times, I’d like to hear from him. Instead, he pops in saying he’ll be back in a minute. Then he comes back in 6 hours with a few words “looks fine to me”. He’s been hitting a lot of winners this year, but I’d personally like more concrete info a lot of the times.

jckptrs: I agree there has been a difference in philosophy but that’s reality, now we have to adjust. Use what he says as a recommendation, not the bible. If the reasons that make one feel uncomfortable with an investment (I don’t like $CPB selling it’s healthy food division or $BA killing people with negligence) than don’t invest. It is that simple. As currently, a true revolutionary company, besides AMZN and FB, and GOOGL, who is close? If one is comfortable buying a company at lows, not highs, go

Lu: Wow, how quickly they turn! We all dreamed of having an inside look at how hedge funds trade. Now that we have it, a few poo poo a few of the trades rather than steer clear of them. We were never promised the whispers that suddenly move markets. The man continues to prove himself over the last two decades, even now with a heavy load. Count your blessings, and if that’s not enough, count your money.

stevekim1: (1) I agree that the trading style has changed with the hedge fund, I appreciate the more long term style too. (2) Cody’s super busy, and there are times when he will be less participatory with TWC. (3) As Lu says, count your $$ and your blessings; (4) I bought a good chunk of TSLA today and have built a full position.

stevekim1: What needs to be said, is compare what we are paying for this service to the value we are truly getting. For me, I think the value FAR outweighs the cost. Cody’s a talented dude, and while improvements can be made, frankly, I feel very fortunate overall. We were never promised real-time consultations with Cody, basically just his trades and insights. I get the reasons why we are a naggy group, but we certainly have a good thing going here. Thanks Cody.

Golfcar101: stevekim1: Well said Steve

ricma66: stevekim1: I couldn’t agree more with you, as often happened in the past. For me too the value FAR outweighs the cost that is why I’m a happy member4life. “We were never promised real-time consultations with Cody, basically just his trades and insights.” That reason exactly is why I personally would prefer to stick with his long term view, his overall feel for the market and his investing in his own portfolio. Cody is by far the best I’ve ever encountered in over 30 years in the business.

gebweb: BusyBoardToday, @Lu: “Count your blessings, and if that’s not enough, count your money.” I like that. I consider Cody’s Hedge trade details a bonus, though it does create more need (good or bad) for more ‘self direction’. @mikew29: “Usually when I sell it’s a great BUY signal, so ……” that’s so funny, that’s the little man on my shoulder every time. @All: If TSLA survives, it simply becomes a must buy (with risk) over the mid term being the leader in what I consider inevitable tec

deadaphids: My view FWIW and from maybe 5,000 if not 10,000 feet: (1) Agree with @stevekim1, in that Cody’s trading style and his availability have changed. (2) Not that that’s a totally good thing — e.g., he should be all over the earnings reports of his/our long-held or new favorites, but there are gaps there: just a few delayed words on Tesla (though I guess “”keep cool” says something); a “I haven’t studied VZ’s ER yet” and then nada for days (in fact, nothing yet); and so on. (3) I thought and think it was great and generous that Cody is sharing his hedge fund moves with us, but agree that clarity in his communications on moves is sometimes missing re which is which; and (4) I definitely may be wrong, but while we hear about purchases for the fund, are we getting timely news on all of the subsequent moves (i.e., every time some of the announced options are “nibbled” or sold/closed?) Seems a hedge fund would have a much higher level of activity than our 10,000-day/longer-term portfolio. Bottom line — it’s a Herculean task for Cody to serve both of his masters (and his family), but good that he’s trying to do so.

harvmel: My view from 10000 feet above, as a new-ish guy here, who has nonetheless been following Cody through Marketwatch for some time, is that if there is a continuum of investors between momentum and value, Cody is relatively far over on the value side, but that is missed because he really values growth, so he is not in the stocks most “value” investors are in.  So I don’t look and don’t expect his timing to be perfect, but look to him for the much bigger picture and for his ability to troll through the myriad of tech stocks that are doing well to spot and stick with the best ones.

Cody: Thanks for all the debate about the TWC service and TSLA the stock. I appreciate all the input.

Cody: Honestly, I do agree with Steve here as the amount and win/loss ratio of the idea at TWC for the last few years has been pretty darn good vs what most any other newsletter/trading service in the world has offered…but that I can definitely do better in the chat room and with the writing, etc: “What needs to be said, is compare what we are paying for this service to the value we are truly getting. For me, I think the value FAR outweighs the cost. Cody’s a talented dude, and while improvements can be made…”

Cody: I also would remind you guys that I’ve never been one to freak out about earnings moves the day after a report and that even when I do decide to bail on a stock it’s done without panic. Quarterly reports come and go four times a year and we have 20+ positions and I guarantee that some of them will go down 5% or more each quarter and some of them will go up 5% or more each quarter. Over time, finding investments and/or trades that have huge upside with little risk will continue to pay us huge dividends. I won’t be right all the time about timing, stocks, revolutions, etc.

deadaphids: Cody: during the Q&A you said you hadn’t had time yet to comment on VZ’s earnings (and by now, I suppose, earnings conference call). It being so discussed (you and subs) and a central focus of our 5G discussions/basket — can you give us your thinking now? (Hefre, or an update?) Thanks.

stevekim1: Cody: I have opened a new revenue stream for you. Or maybe a couple of days of board raging about why only I am getting your personal text alerts. Hopefully the board recognizes that bad satire is still satire. You’d better duck anyway.

Gambler15: stevekim1 Lol.

Cody: Steve, did you get the text I just sent all of you special text subscribers about how we weren’t supposed to tell everybody in the TWC Chat ROOM about the texts I send you?

stevekim1: Cody: My remaining 1/2020 QCOM calls, which happen to be up 1100%, dropped 6% today. Why didn’t you warn me this could happen????

Cody: Q. My remaining 1/2020 QCOM calls, which happen to be up 1100%, dropped 6% today. Why didn’t you warn me this could happen???? A. Haha, I laughed out loud on that one. And my bad, Steve, I should have let you know that QCOM would go down today after going up 30% in a straight line in the last week.

farokha: Cody – Do you expect QCOM to pause here or continue charging into end of year with all the 5g stuff going on ?

stevekim1: farokha: I think Cody has said a few times since the big gap up that he sees room for QCOM to continue to run into the end of the year, but that is not the necessarily the same as “continue charging.”

harvmel: One more, what happened with EA to make you bail? like I said above, I don’t expect your timing to be perfect, and you bailed very fast there, compared to patience with MO, tsla…anything particularly up with this one?

Cody: I don’t know…didn’t like the risk/reward scenario the more I dug into their lotto box issues.

stevekim1: harvmel: Cody texted me that he bailed on EA because he felt that Carson Wentz’s player rating on QB mobility in Madden 19 was a couple of points too high, which obviously does not bode well for the direction of the company. Surprised he didn’t text you about that. You need to sign up for his personal text alerts. Sometimes he gives alerts about selling positions he has not even opened yet. Great to have that advance wisdom.