What is the 5-Day Margin? What are its benefits ...

Former investment bank FX trader: some thoughts

Former investment bank FX trader: some thoughts
Hi guys,
I have been using reddit for years in my personal life (not trading!) and wanted to give something back in an area where i am an expert.
I worked at an investment bank for seven years and joined them as a graduate FX trader so have lots of professional experience, by which i mean I was trained and paid by a big institution to trade on their behalf. This is very different to being a full-time home trader, although that is not to discredit those guys, who can accumulate a good amount of experience/wisdom through self learning.
When I get time I'm going to write a mid-length posts on each topic for you guys along the lines of how i was trained. I guess there would be 15-20 topics in total so about 50-60 posts. Feel free to comment or ask questions.
The first topic is Risk Management and we'll cover it in three parts
Part I
  • Why it matters
  • Position sizing
  • Kelly
  • Using stops sensibly
  • Picking a clear level

Why it matters

The first rule of making money through trading is to ensure you do not lose money. Look at any serious hedge fund’s website and they’ll talk about their first priority being “preservation of investor capital.”
You have to keep it before you grow it.
Strangely, if you look at retail trading websites, for every one article on risk management there are probably fifty on trade selection. This is completely the wrong way around.
The great news is that this stuff is pretty simple and process-driven. Anyone can learn and follow best practices.
Seriously, avoiding mistakes is one of the most important things: there's not some holy grail system for finding winning trades, rather a routine and fairly boring set of processes that ensure that you are profitable, despite having plenty of losing trades alongside the winners.

Capital and position sizing

The first thing you have to know is how much capital you are working with. Let’s say you have $100,000 deposited. This is your maximum trading capital. Your trading capital is not the leveraged amount. It is the amount of money you have deposited and can withdraw or lose.
Position sizing is what ensures that a losing streak does not take you out of the market.
A rule of thumb is that one should risk no more than 2% of one’s account balance on an individual trade and no more than 8% of one’s account balance on a specific theme. We’ll look at why that’s a rule of thumb later. For now let’s just accept those numbers and look at examples.
So we have $100,000 in our account. And we wish to buy EURUSD. We should therefore not be risking more than 2% which $2,000.
We look at a technical chart and decide to leave a stop below the monthly low, which is 55 pips below market. We’ll come back to this in a bit. So what should our position size be?
We go to the calculator page, select Position Size and enter our details. There are many such calculators online - just google "Pip calculator".

https://preview.redd.it/y38zb666e5h51.jpg?width=1200&format=pjpg&auto=webp&s=26e4fe569dc5c1f43ce4c746230c49b138691d14
So the appropriate size is a buy position of 363,636 EURUSD. If it reaches our stop level we know we’ll lose precisely $2,000 or 2% of our capital.
You should be using this calculator (or something similar) on every single trade so that you know your risk.
Now imagine that we have similar bets on EURJPY and EURGBP, which have also broken above moving averages. Clearly this EUR-momentum is a theme. If it works all three bets are likely to pay off. But if it goes wrong we are likely to lose on all three at once. We are going to look at this concept of correlation in more detail later.
The total amount of risk in our portfolio - if all of the trades on this EUR-momentum theme were to hit their stops - should not exceed $8,000 or 8% of total capital. This allows us to go big on themes we like without going bust when the theme does not work.
As we’ll see later, many traders only win on 40-60% of trades. So you have to accept losing trades will be common and ensure you size trades so they cannot ruin you.
Similarly, like poker players, we should risk more on trades we feel confident about and less on trades that seem less compelling. However, this should always be subject to overall position sizing constraints.
For example before you put on each trade you might rate the strength of your conviction in the trade and allocate a position size accordingly:

https://preview.redd.it/q2ea6rgae5h51.png?width=1200&format=png&auto=webp&s=4332cb8d0bbbc3d8db972c1f28e8189105393e5b
To keep yourself disciplined you should try to ensure that no more than one in twenty trades are graded exceptional and allocated 5% of account balance risk. It really should be a rare moment when all the stars align for you.
Notice that the nice thing about dealing in percentages is that it scales. Say you start out with $100,000 but end the year up 50% at $150,000. Now a 1% bet will risk $1,500 rather than $1,000. That makes sense as your capital has grown.
It is extremely common for retail accounts to blow-up by making only 4-5 losing trades because they are leveraged at 50:1 and have taken on far too large a position, relative to their account balance.
Consider that GBPUSD tends to move 1% each day. If you have an account balance of $10k then it would be crazy to take a position of $500k (50:1 leveraged). A 1% move on $500k is $5k.
Two perfectly regular down days in a row — or a single day’s move of 2% — and you will receive a margin call from the broker, have the account closed out, and have lost all your money.
Do not let this happen to you. Use position sizing discipline to protect yourself.

Kelly Criterion

If you’re wondering - why “about 2%” per trade? - that’s a fair question. Why not 0.5% or 10% or any other number?
The Kelly Criterion is a formula that was adapted for use in casinos. If you know the odds of winning and the expected pay-off, it tells you how much you should bet in each round.
This is harder than it sounds. Let’s say you could bet on a weighted coin flip, where it lands on heads 60% of the time and tails 40% of the time. The payout is $2 per $1 bet.
Well, absolutely you should bet. The odds are in your favour. But if you have, say, $100 it is less obvious how much you should bet to avoid ruin.
Say you bet $50, the odds that it could land on tails twice in a row are 16%. You could easily be out after the first two flips.
Equally, betting $1 is not going to maximise your advantage. The odds are 60/40 in your favour so only betting $1 is likely too conservative. The Kelly Criterion is a formula that produces the long-run optimal bet size, given the odds.
Applying the formula to forex trading looks like this:
Position size % = Winning trade % - ( (1- Winning trade %) / Risk-reward ratio
If you have recorded hundreds of trades in your journal - see next chapter - you can calculate what this outputs for you specifically.
If you don't have hundreds of trades then let’s assume some realistic defaults of Winning trade % being 30% and Risk-reward ratio being 3. The 3 implies your TP is 3x the distance of your stop from entry e.g. 300 pips take profit and 100 pips stop loss.
So that’s 0.3 - (1 - 0.3) / 3 = 6.6%.
Hold on a second. 6.6% of your account probably feels like a LOT to risk per trade.This is the main observation people have on Kelly: whilst it may optimise the long-run results it doesn’t take into account the pain of drawdowns. It is better thought of as the rational maximum limit. You needn’t go right up to the limit!
With a 30% winning trade ratio, the odds of you losing on four trades in a row is nearly one in four. That would result in a drawdown of nearly a quarter of your starting account balance. Could you really stomach that and put on the fifth trade, cool as ice? Most of us could not.
Accordingly people tend to reduce the bet size. For example, let’s say you know you would feel emotionally affected by losing 25% of your account.
Well, the simplest way is to divide the Kelly output by four. You have effectively hidden 75% of your account balance from Kelly and it is now optimised to avoid a total wipeout of just the 25% it can see.
This gives 6.6% / 4 = 1.65%. Of course different trading approaches and different risk appetites will provide different optimal bet sizes but as a rule of thumb something between 1-2% is appropriate for the style and risk appetite of most retail traders.
Incidentally be very wary of systems or traders who claim high winning trade % like 80%. Invariably these don’t pass a basic sense-check:
  • How many live trades have you done? Often they’ll have done only a handful of real trades and the rest are simulated backtests, which are overfitted. The model will soon die.
  • What is your risk-reward ratio on each trade? If you have a take profit $3 away and a stop loss $100 away, of course most trades will be winners. You will not be making money, however! In general most traders should trade smaller position sizes and less frequently than they do. If you are going to bias one way or the other, far better to start off too small.

How to use stop losses sensibly

Stop losses have a bad reputation amongst the retail community but are absolutely essential to risk management. No serious discretionary trader can operate without them.
A stop loss is a resting order, left with the broker, to automatically close your position if it reaches a certain price. For a recap on the various order types visit this chapter.
The valid concern with stop losses is that disreputable brokers look for a concentration of stops and then, when the market is close, whipsaw the price through the stop levels so that the clients ‘stop out’ and sell to the broker at a low rate before the market naturally comes back higher. This is referred to as ‘stop hunting’.
This would be extremely immoral behaviour and the way to guard against it is to use a highly reputable top-tier broker in a well regulated region such as the UK.
Why are stop losses so important? Well, there is no other way to manage risk with certainty.
You should always have a pre-determined stop loss before you put on a trade. Not having one is a recipe for disaster: you will find yourself emotionally attached to the trade as it goes against you and it will be extremely hard to cut the loss. This is a well known behavioural bias that we’ll explore in a later chapter.
Learning to take a loss and move on rationally is a key lesson for new traders.
A common mistake is to think of the market as a personal nemesis. The market, of course, is totally impersonal; it doesn’t care whether you make money or not.
Bruce Kovner, founder of the hedge fund Caxton Associates
There is an old saying amongst bank traders which is “losers average losers”.
It is tempting, having bought EURUSD and seeing it go lower, to buy more. Your average price will improve if you keep buying as it goes lower. If it was cheap before it must be a bargain now, right? Wrong.
Where does that end? Always have a pre-determined cut-off point which limits your risk. A level where you know the reason for the trade was proved ‘wrong’ ... and stick to it strictly. If you trade using discretion, use stops.

Picking a clear level

Where you leave your stop loss is key.
Typically traders will leave them at big technical levels such as recent highs or lows. For example if EURUSD is trading at 1.1250 and the recent month’s low is 1.1205 then leaving it just below at 1.1200 seems sensible.

If you were going long, just below the double bottom support zone seems like a sensible area to leave a stop
You want to give it a bit of breathing room as we know support zones often get challenged before the price rallies. This is because lots of traders identify the same zones. You won’t be the only one selling around 1.1200.
The “weak hands” who leave their sell stop order at exactly the level are likely to get taken out as the market tests the support. Those who leave it ten or fifteen pips below the level have more breathing room and will survive a quick test of the level before a resumed run-up.
Your timeframe and trading style clearly play a part. Here’s a candlestick chart (one candle is one day) for GBPUSD.

https://preview.redd.it/moyngdy4f5h51.png?width=1200&format=png&auto=webp&s=91af88da00dd3a09e202880d8029b0ddf04fb802
If you are putting on a trend-following trade you expect to hold for weeks then you need to have a stop loss that can withstand the daily noise. Look at the downtrend on the chart. There were plenty of days in which the price rallied 60 pips or more during the wider downtrend.
So having a really tight stop of, say, 25 pips that gets chopped up in noisy short-term moves is not going to work for this kind of trade. You need to use a wider stop and take a smaller position size, determined by the stop level.
There are several tools you can use to help you estimate what is a safe distance and we’ll look at those in the next section.
There are of course exceptions. For example, if you are doing range-break style trading you might have a really tight stop, set just below the previous range high.

https://preview.redd.it/ygy0tko7f5h51.png?width=1200&format=png&auto=webp&s=34af49da61c911befdc0db26af66f6c313556c81
Clearly then where you set stops will depend on your trading style as well as your holding horizons and the volatility of each instrument.
Here are some guidelines that can help:
  1. Use technical analysis to pick important levels (support, resistance, previous high/lows, moving averages etc.) as these provide clear exit and entry points on a trade.
  2. Ensure that the stop gives your trade enough room to breathe and reflects your timeframe and typical volatility of each pair. See next section.
  3. Always pick your stop level first. Then use a calculator to determine the appropriate lot size for the position, based on the % of your account balance you wish to risk on the trade.
So far we have talked about price-based stops. There is another sort which is more of a fundamental stop, used alongside - not instead of - price stops. If either breaks you’re out.
For example if you stop understanding why a product is going up or down and your fundamental thesis has been confirmed wrong, get out. For example, if you are long because you think the central bank is turning hawkish and AUDUSD is going to play catch up with rates … then you hear dovish noises from the central bank and the bond yields retrace lower and back in line with the currency - close your AUDUSD position. You already know your thesis was wrong. No need to give away more money to the market.

Coming up in part II

EDIT: part II here
Letting stops breathe
When to change a stop
Entering and exiting winning positions
Risk:reward ratios
Risk-adjusted returns

Coming up in part III

Squeezes and other risks
Market positioning
Bet correlation
Crap trades, timeouts and monthly limits

***
Disclaimer:This content is not investment advice and you should not place any reliance on it. The views expressed are the author's own and should not be attributed to any other person, including their employer.
submitted by getmrmarket to Forex [link] [comments]

Cornering Silver Market

Cornering Silver Market
Would you like to entertain yourself with a story about one of the greatest schemes in the history and, maybe, learn a few plays? This story is about three brave autistic brothers, who almost cornered the entire commodity and how one (not so brave, but shrewd) bank did it without anyone noticing. As in any good fable – there’s a moral and a strategy that you could draw from it.
The year is 1971. Nixon temporarily abolishes gold standard. And every temporary government program is never reversed, as you know. Trading price of gold went sky high: from 270s to 800s in two years or so. Enter Hunt brothers, sons of H. L. Hunt, oil tycoon, one of, if not the, richest man in the world at that time. Hunt family was, what one might describe as, right-wing libertarian and anti-globalist. They believed that Keynesian economics and the US shift to the left in the 60s will lead to the debasement of the US dollar and monetary collapse. Thus, return to the gold or silver standard was the way, as they thought. Allegedly, Hunts also had a feud with Rothschild family and other financial speculators, and were resentful towards the US government for doing nothing to protect their oil assets in Libya, confiscated by Gaddafi. So they started their move against America, alpha-silver bug style.
In 1973 Hunts began buying all the silver they could. And, instead of just speculating futures contracts, they actually took delivery. Initial price was $1.5/oz. Silver was shipped to Switzerland in secretive and costly operations and stored in vaults (brothers feared confiscations – remember, private citizens were still prohibited from owning gold in the US).
The following events are quite vivid and include the efforts to create a cartel similar to OPEC, talks with Iran and Saudi monarchs, pump and dump publicity and large scale purchases of miners. But we will spare the details, except one: Hunts even tried to corner the soy market at the same time. Reminds you how WSB slv gang quickly switched to corn gang. But the soy scheme didn't fly and they focused on silver only. Their efforts pumped the price to almost $50/oz by early 1980. At some point Hunts controlled around 230 million oz of silver and the majority of what was traded.

Hunt brothers laughing at your pump&dump effort

Of course, when you are such a smart ass, you become a target. Chicago exchange officials became very concerned citizens by 1979. They started issuing numerous regulations limiting the amount of market share one can accumulate in one hands. As all American concerned citizens, they had financial incentive to do so: Hunts managed to prove that Chicago exchange board members had short positions against silver. Finally, CFTC (Commodity Futures Trading Commission) issued a ruling that basically forced Hunts to liquidate part of their portfolio by February 1980. This sent silver prices down dramatically and brothers started to get margin calls which they could not cover. And so their story ended with bankruptcies and heavy fines for the family. Shortly after, Reagan and Volcker raised interest rates and silver price never recovered to $50/oz ever since.
We skip to the year 2008. Global financial crisis is in full swing. Bear Stearns is royally fucked, as due to all bears. Before the music was over, they mastered paper speculation of futures contracts like no one else. Bear Stearns accumulated world biggest naked short position on silver. What could go wrong? Stonks go up, silver goes down. Until it reversed and silver skyrocketed from $11 to $21. This became one of the margin calls to screw Bear Stearns. JP Morgan is asked by the FED and co. to buy out BS and to save the entire market. Since BS's shorts are now deeply down - JPM gets the whole bank with pennies on a dollar.
But the problem is that JPM themselves have massive naked short position on silver. Combined with BS it will exceed anything permitted by the CFTC. Since Obama administration was in a rush, they push CFTC to grant JPM basically a carte blanche to accumulate any position over the limit for a period of time. Period of time comes due and turns out that JPM not only didn’t trim the shorts significantly – they even bought more shorts at some point. Even with all the fines, it went very much their way, because in 2009 silver dropped. So they pocketed hundreds of millions of dollars.
But come 2011 and silver spiked again, dramatically. JPM, now bleeding cash on shorts, could close short positions, like any of us would do, right? Nope, fuckyall says JPM and starts hedging short futures positions with… physical silver. 'But wouldn’t that be even more control over the commodity?' - you might ask. See, nothing in the rules of CFTC says you can’t do that, because to help cronies speculate with paper futures contracts, made of thin air, CFTC basically started treating physical silver and futures as two different instruments (it’s, actually, even more complicated than that: google difference between physical, eligible, registered and so on).
In the next 9 years JPM becomes the world biggest holder of both short contracts and physical silver. The later they 'loaned' to SLV trust, of which they are custodian. This way upkeep of physical silver, which otherwise would be a liability for hedging, becomes an asset, because we, retards, who own SLV pay the maintenance. People are often confused here, because SLV is issued by Black Rock, not JPM. Well, there is a difference between being an operator of a financial instrument and being a custodian providing backing. Now, to confuse you even more – JPM is one of the major holders of Black Rock itself with 1.6% or sth like that.
By estimates of Theodore Butler, JPM acquired 900 million oz of physical silver since 2011. That’s 4 times more than what Hunts owned. Just shows you, that banks can get a pass with something that even the richest individuals can not. And you have to give it to JPM - their play was very clever. Instead of risking it all on a margin call, they make money on every turn.
As of 2020, JPM still holds both shitton of physical silver and short COMEX contracts. You can call this the most epic straddle of all time. With such mass they can swing prices in any directions and profit from this on any given day. Latest example you’ve seen on the August 11th.
Why am I bothering your poor gambling soul with this wall of text, you might ask? Market makers manipulate the market as they please, what’s new about that? Well, here we come to the conclusions and a strategy. How can a small retard replicate what the big boys are doing?
Conclusions:
  1. There will not be a linear up or down with silver and the swings might be dramatic. The reason being not only the sentiment of investors, but the ease of manipulation that is eligible to big players.
  2. If we believe that speculation will throw the price of silver in all directions – it is unwise to go only long or short on silver, especially on a short term;
What shall we do?
a) Only long expiration dates and calls; no weekly expiration, not even monthly. Ideally – at least half year options;
b) Go long on certain silver stocks. Maybe I’ll do a write up on good silver stocks to buy;
c) Sell covered calls on long positions;
d) Buy 1-3 month puts on your long positions as a hedge;
Now, day trade with those positions: on red days sell your puts and buy back covered calls. On green days – reload puts and sell calls. Repeat until lambo.
P. S.: I gathered these facts from the open sources, since these events were of interest to me. Some facts are intentionally oversimplified, google for more details, there are good reads. And feel free to correct me if you know contradictory facts.
P. P. S.: JPM, plz don’t whack me.
submitted by negovany to wallstreetbets [link] [comments]

The TSLA 2K Play - A Trade Retrospective on Taking a $.21 Credit to Make $8.34 More

There are different ways to play TSLA to $2000 this past week. Here’s my thought process on how I approached trading the move up, without paying a debit (but uses margin).

The Entry

On Monday, August 17, besides TOS being absolutely atrocious, TSLA was lurching higher, and at around 11am PST or so, when it broke out to new highs, my thought was that there’s probably going to be a short squeeze again that takes us to $2000, the target that basically everyone was looking at. So, I looked to put on a play that captured something to that $2000 price level by Friday, Aug 21 expiration.
I began by looking at the 1980/2000 long call vertical. At the time, that spread cost $2.28 debit. So if I were to just put on that vertical, I would be paying $2.28 to make potentially $17.72. But I don’t really like paying large debits (large is anything above $.25 per spread), especially for these types of short-term directional bets.
So I looked for other ways to reduce the debit. Alongside the purchase of the long call vertical, I also sold the 1650/1625 put vertical, for $2.05 credit. The reason for placing the short strike of the put vertical at 1650 is that it was under Monday’s low, and the reason for the long strike at 1625 was that it made the put vertical wide enough to collect a decent credit. Now, the total debit on the trade became $2.28 (debit of 1980/2000 call vertical) - $2.05 (credit from 1650/1625 put vertical), or $.23.
$.23 was pretty cheap, and honestly I could’ve stopped there. But as I was thinking about the trade, I realized I didn’t really like how the short put verticals actually added more downside risk to the trade. So I was thinking that as early as I could, I would buy back that short put vertical once it drained in value, as TSLA continued running up with the momentum it had. And given the huge upside momentum that day, I thought that TSLA would probably gap and continue higher the following day, or at the very least just move sideways, which would drain the value of the short put vertical and allow me to buy it back for a low debit.
However, if I bought back the put vertical before it fully drained to 0, then my overall debit on the trade wouldn’t just cost $.23 anymore - it would cost more. So in the spirit of keeping the debit as low as possible, I needed to actually collect more credit from somewhere else, if I really didn’t want to pay for this trade. So, I decided that I was going to sell a call vertical above the 1980/2000 long call vertical. And a safe enough distance above the long call vertical, would be up at 2200, which gives me 200 points of runway above 2000. So I sold to open the 2200/2250 call vertical, for $1.27 credit.
I felt safe about selling the 2200/2250 call vertical, because for it to really be at risk, TSLA would first need to move above 2000, the psychological level, and by the time it starts to get near 2200, the 1980/2000 call vertical will be 20 points deep ITM, so I have 20 points of coverage. Of course there’s still 30 points of risk (given that the 2200/2250 short call vertical is 50 points wide), but time is on my side. Assuming that TSLA even gets near 2200 on the last day, given how little time left there is, that short call vertical would probably be trading for maybe $10 or so, and the 1980/2000 long call vertical in front of that short call vertical, would be deep ITM and worth $20, so I can just close the entire spread at a profit anyway.
So after selling that 2200/2250 call vertical, the trade went from $.23 debit to $1.04 credit (because $.23 - $1.27 = -$1.04, or $1.04 credit). Now I’m getting paid to play the breakout to TSLA 2K.

The Adjustment

On Tuesday, TSLA gapped up higher, and right off the bat, the short put verticals basically drained from $2.05 to $.83. I closed that out to remove any downside risk, so that if TSLA decides to reverse and tank, or hang out sideways and never make it to 2000, no harm no foul, I have the upside play on for a credit. Recall that $.23 (the debit of the initial entry) - $1.27 (the credit collected from the sale of the 2200/2250 call vertical) + $.83 (the debit of buying back the short put vertical) is -$0.21, which is a $.21 credit, after adjustments. And now, I just have to manage TSLA to the upside.
The result of this adjustment left me with a 4 legged spread where I’m long the 1980/2000 call vertical and short the 2200/2250 call vertical (this 4-legged spread is also called a condor, specifically a Call condor).
Throughout Tuesday and all of Wednesday, TSLA just moved sideways, and I was fine with that. Others who purchased naked long calls far OOM were worried about the premium drain, but I was fine knowing that I got paid to play the move to 2K, whether it happened or not. It completely did not matter if TSLA moved sideways or tanked, because it wouldn’t negatively impact the equity curve. Another reason why I actually liked TSLA hanging sideways is that it gives TSLA less of a chance to surge higher and run over that 2200/2250 short call vertical with the time left before expiry.

The Exit

Thursday was where the magic happened (for pretty much everyone). As we know at around 7:45 am PST, TSLA rallied from around $1900 to almost $2000, and the Call condor really started to expand in value. When TSLA was at $1990, the call condor spread expanded to $8.34.
Recall that the cost on this trade (after the closing the short put vertical) put my cost at a $.21 credit. Now, I can sell this condor out and pocket another $8.34. That’s pretty sweet. Getting paid $.21 to make another $8.34.
(At this moment, I noted what the legs were trading for. The long vertical of the condor was trading for $9.27, and the short vertical was actually trading for $.93. Recall that when I entered the short vertical on Monday, I actually collected a $1.27 credit on it. Now, even after the 150 point move up in TSLA, even after volatility expansion, that short vertical was still worth $.34 LESS - that’s the power of theta decay).
So at that point, I pretty much just closed out the entire position. I was pretty happy with essentially getting paid $.21 to make another $8.34 (in hindsight, I could’ve milked another $11.66 per spread, but that’s besides the point).

FAQ

TL;DR - I collected a $.21 credit to make an additional $8.34, netting $8.55 profit per spread.
submitted by OptionsBrewers to options [link] [comments]

I spent the last 6 weeks playing all 13 main series Pokémon games. Here's my experiences

Some of you may remember me. Most of you probably don't. I made a post about it six weeks ago, which you can find here, about how I was gonna play 13 of the main series Pokémon games within six weeks, which I did. I was gonna make weekly updates, but they got automatically removed for some reason, so that's fun
So what I'm gonna do now is the biggest part of this whole 'project.' I'm gonna summarize exactly 306 hours and 35 minutes of gameplay within one reddit post. And if you're wondering how I know the exact times, I made a Google Sheet to document my journey, which you can see here, if you want all the boring numbers. If you don't want my summary of every single game, just scroll down to the bottom, where I'll share my thoughts about the whole ordeal. So let's get started on this, shall we?

BLUE

Honestly, I enjoyed Blue a lot more than I thought I would, even though the flaws of Gen 1 were hard to ignore. And may I say, thank god for LP compilers and podcasts, because 95% of the time I was playing Blue and Crystal, I was listening to something else. There's only so much beep-boop music one man can take. Overall, it was a great start to this journey. Some miscellaneous notes I took while playing:
The team I used: Venusaur, Golem, Alakazam, Ninetales, Vaporeon, Snorlax

CRYSTAL

Crystal was where the... difficulties of this challenge started coming up. I actually started Crystal on July 6th, just after capturing Mewtwo, and I played up to beating Bugsy. Unfortunately, I stayed up way too late, and woke up with a massive headache. So I spent most of the next day unwinding and mentally preparing myself for what's coming up. The rest of the game wasn't too difficult... until the 10th. I wanted to stay on a '1 game per 3 days' schedule, and this was the last day for Crystal, and I was just started on the Pokemon League. I was a little underleveled, so I spent the first half of my day repeatedly grinding up farther and farther up until I beat Lance on my 5th or 6th attempt. So I had to speed through all the Kanto section to stay on track. Which I did, to my amazement. I beat all the Kanto gyms super fast, and managed to get to Red... and immediately got slamjammed by his Pikachu
So this lead me to a question: 'when can I stop playing a game?' So I made this rule: Once I've beaten the Champion and the credits roll, I'm free to move on to the next game as I please. This is the hard rule I'm gonna adhere to. I don't want this to become stressful or a job, so I'm making this rule for my own sanity
That all out of the way, here's a few notes I took while playing:
The team I used: Typhlosion, Gengar, Slowking, Forretress (aka the mistake), Umbreon, Dragonair

EMERALD

If I had to create a line graph detailing my enjoyment of Emerald, it would be a line steadily going up... until Flannery, then just a slow painful crawl down to the end. I can't place an exact reason why, but this was the only game I played that I've actively disliked playing through. If I had to hazard a guess, I'd say it's because the RNG of Pokemon finally broke me. If there's one lesson I took out of this, it's that you can NEVER chance it on Sleep/Paralysis/Confusion not working. If you wanna work past them, you just heal. And if you inflict it on an enemy, it just won't work. I know it sounds like I'm exaggerating for comedic effect, but this was way too true for me. And the critical hits in this game were maybe the worst yet, even more so than gen 1, although I realize that might've just been me
I ended up using Rayquaza to speed through the Elite Four, because I was just genuinely exhausted of this game, and I did not want to try grinding through it. I'm gonna try to avoid using legendaries, but if I have to, I'm not gonna feel sorry about it
That being said, here's some various extra notes:
The team I used: Swampert, Gardevoir, Breloom, Torkoal, Skarmory, Rayquaza

FIRE RED

This game was a lot easier to play through than Emerald, fortunately, although I don't have a lot more to say. It was pretty fun, but my Blue playthrough might've been more enjoyable due to my choices in team members. I decided against capturing all the legendaries this time around, with one exception. I captured Articuno to replace my Fearow for the Pokemon League, since they were long outclassed by this point, and I couldn't cheese my way through Lance with poison-types this time. Still, my Fearow did better than the useless Forretress, so I still appreciate them. Overall, it felt like my Blue playthrough, except slightly worse. But it was still better than Emerald, so I won't complain
That's pretty much all I have to say, so time for some extra points:
The team I used: Charizard, Fearow, Gyarados, Vileplume, Dugtrio, Magneton, Articuno

PLATINUM

So this is my favorite Pokémon game, so I really tried to be impartial about it and treat it the same as the others... which didn't work, since it was the game I spent the most time on and explored the most in. Whoops! But I'm not ashamed; this was the best region out of everything I played. Honestly, I'm glad to know that my joy for this game wasn't just misplaced nostalgia, and still holds up to today. Although it was really unfortunate that I was having technical issues that I had to devote a lot of time to dealing with, otherwise I could've probably beaten this game in three/three and half days. I'll go into more details in the SoulSilver section.
So here's some notes about my experience:
The team I used: Torterra, Staraptor, Gastrodon, Bronzong, Garchomp, Porygon-Z

SOULSILVER

If I had to rank my favorite Pokémon games, SoulSilver would be in the top 5, only just below Platinum. So it sucks that my house was suffering internet outages (around the 19th-24th) while I was supposed to be playing this game. And since gen 4 is the slowest of all the games, that DOUBLY sucks. So I had to devote valuable time to fixing that, and ended up not getting to play the Kanto section of this game. That sucks, but since I already went through this with Crystal, so I'm not too fussed. Other than the circumstances, this wasn't too different from Crystal, although my team choices were a lot better
Yada, yada, yada, notes:
The team I used: Feraligatr, Ampharos, Togekiss, Houndoom, Exeggcutor, Mamoswine

WHITE & WHITE 2

(I'm combining the two because I don't have a lot to say about them individually)
So as a child, I really disliked White, because I was a child who couldn't appreciate how much effort was put into them, and I was upset I couldn't use any of my old favorites. But as an adult, I can really understand the work behind it, or at least behind White 1. Although I still say the lack of options in White 1 is a major downside, since anybody who's not challenging themselves are gonna have some combination of the same 15-ish Pokémon on the story campaign. But while the 2nd game has a better Pokémon choice, the story is also factually worse, so pick your poison. But back to the point, I really enjoyed these games. A lot more than I did when I was younger, anyways
So here's my extra notes; two for each game:
(White)
(White 2)
The team I used for White 1: Serperior, Swoobat, Excadrill, Scolipede, Carracosta, Chandelure
The team I used for White 2: Emboar, Azumarill, Crobat, Sigilyph, Sawsbuck, Escavalier

X

A lot of my friends consider X/Y some of the worst games in the franchise, and while they may have a point, I still enjoy them a lot more than... another title we'll be talking about later. Personally, I think the gameplay is pretty much a straight upgrade from Black/White, although the story... UGH. Easily the worst. Especially Team Flare. I could make an entire post about them, but to simplify: They're a team all about style, yet their admins are way too overdesigned and forgettable to make a point. Instead of the cold uniformity of Team Galactic or the easily understood motives of Team Plasma, they're just a hot mess whose admins are completely forgettable. And Lysandre is just President Rose, but more obviously a villain and somehow more overdramatic
I had a loooooot of notes about this game, mostly about Team Flare, but here's what I condensed it down to:
The team I used: Chesnaught, Talonflame, Florges, Meowstic, Barbaracle, Goodra

OMEGA RUBY

(So a quick preface, I actually played Ultra Moon before Omega Ruby, since the cartridge I had was corrupted, so I played UM while I waited for my new cart to arrive. Just thought I'd mention it)
So Alpha Sapphire was is in the top 5 games for me, alongside Platinum and SoulSilver. Which is why I'm kinda surprised that this is the game I spent the least time on (17 hours, 18 minutes), being one of the two games I spent less than 20 hours on. Which is absolutely strange to me, since I spent at least an hour grabbing useful TMs for the Elite Four and getting Heart Scales to remember moves, so it really should be higher. Whatever, what about the gameplay? Well, it was like Emerald, but the exact opposite, since I actually really enjoyed it. I don't have much else to say except Pelipper, Zangoose, and Cacturne were all surprisingly fun team members. Seriously, Cacturne might be my new favorite grass-type
Extra notes, blah blah blah:
The team I used was: Blaziken, Pelipper, Manectric, Aggron, Zangoose, Cacturne

ULTRA MOON

So I originally promised to play Sun and Ultra Sun in my original post, but some circumstances led me to cut it down to Ultra Moon. More details can be read about it in the Google Sheet, but trust me, I have my reasons. I decided to play the Ultra version because the bonus versions of the games are supposed to be the "definitive version" of the games. Not sure if I agree on that, since there's basically no difference between Sun and Moon and USUM, and what is different is sometimes worse than what it was. This isn't the time or place to review these games, but if you ever want to replay the Alola games, pick up Sun or Moon, and avoid USUM. As for my experience... I dunno, it was ok. I liked my team, had a few challenges, yeah yeah yeah. Look, this is like the 10th or 11th game I played, this whole thing's become routine at this point
But at least I got a few notes to add:
The team I used: Primarina, Lopunny, Alolan Muk, Ribombee, Alolan Marowak, Lurantis, Metagross

LET'S GO, EEVEE

UUGGHHHH. This is my least favorite game. I insisted on playing it, since it was technically a main series game, and that was a mistake. I forgot how hand-holding this game was. If you don't know what I'm talking about here's my example:
In the original games, you could immediately go from Lavender Town to Celadon, and then go into the Rocket base, no problem. Here, you have to go up the tower, see that there's ghosts, and then leave the tower (which to my knowledge, no other dungeon in Pokémon ever does) then go see Jessie and James talk out loud about the ROCKET HIDEOUT in the CELADON GAMES CORNER. Then when you get there, you can get close to them, and they'll talk out loud about the HIDDEN HIDEOUT with the SWITCH BEHIND THE POSTER
Also, the gym requirement thing is just dumb. The fact that the game requires you to have a grass/water-type to fight Brock or have a Pokémon at least level 45 before fighting Sabrina is insane, and makes it nearly impossible to lose. And Koga's requirement of catching 50 unique Pokémon is uniquely cruel in a game where there's only 150-ish Pokémon available, especially to people like me who just like to capture a core team and stop catching unique Pokémon
Even besides those, the catching mechanic was broken. Seriously, it was terrible. I had to throw the ball at a 90-degree angle to throw the ball at a target just a little off to the side. One time, I tossed the controller upwards to throw the ball, and it was a perfect throw. Uggghh, I don't even wanna talk about my experience, I just want to complain. So whatever, I'm moving on, no notes this time
The team I used: Eevee, Victreebel, Mr. Mime, Rhydon, Starmie, Magmar

SHIELD

I'll admit, I enjoyed this game more than I thought I would. Maybe it's just because it WASN'T Let's Go, or because it was so easy to grind up levels with wild area candies. Either way, this was my second-fastest game played, clocking in at exactly 20 hours played. If I devoted myself to it, I could've beaten this in two days. But since I've got nothing much else to talk about, I'd like to discuss the stories of these games. Because I think I've found the perfect metaphor for these "Poképlots." It's like there's a good story somewhere in there, but half of it we're told to stay out of because we're not adults, and the other half of the plot was ripped out of a better story and painstakingly refitted into the Poképlot format. And if you're wondering why I'm talking so much about the stories, it's because that's the only thing meaningfully different about these games at this point
Alright, one last set of notes:
The team I used: Inteleon, Boltund, Tsareena, Centiskorch, Perrserker, Grimmsnarl

CONCLUSION

So I ended up completing my challenge, but what was the point of this whole thing? Well, I wanted to try and revive my love for the Pokémon franchise, since the past few games have really burned me out on the series. So, did I accomplish that?
Yeah! Despite all the hard times and frustrating moments, this was actually really fun. I feel like I should hate Pokémon now, since I've literally spent the last month and a half doing nothing but playing the games, but no. I came out of this whole challenge with a greater enjoyment of the series and a few new favorite Pokémon. So... mission accomplished! Although I don't think I'm gonna play any Pokémon games until the Sinnoh remakes come out (whenever that happens). I'm not burned out, but I think I need some time away at this point
So... that's it. I'm done. It's over. Feels free to reply about how right/wrong I am with my opinions. Thank you for coming to my TED Talk
EDIT: I'm glad this blew up, all the discussions I've been having have been super interesting, especially since we're talking about literally any Pokémon game right now. Thanks for making this post so incredible with your replies, guys. I'm happy my experiment was so interesting to read about
submitted by ThePigeonManLyon to pokemon [link] [comments]

PRPL Nurples- Why purple valuation just might make your NIPS hard - DD inside

PRPL Nurples- Why purple valuation just might make your NIPS hard - DD inside
All- I have received hundreds of DM asking where the stock is going. I have received questions such as: where do you think it stops, is it over valued, undervalued, should my mom invest, should i Yolo, should i sell and take profits? blah, blah blah. Here is some DD- stop asking me about where this ends up because I don't know for sure but I have some Feely Good estimates. I hope this post makes your nipples hard and if it doesn't you're probably a gay bear.
I am going to give you a quick run down of what my expectations are for Q2 earnings and it will include the good, the bad and the ugly. The ugly being the warrant accrual that will hurt GAAP.
First of all, There is little that needs to be determined for Q2 top-line as they have already released April and May Sales. April Sales Came in around ~62M based on my math and May Sales came in at 88M and some change. Based on these numbers, we can safely assume that we will at a minimum have somewhere around 225M in revenue for the quarter by using the average of April and May to determine June. I believe 225M to be on the low side and I have continued to up my estimates as I believe E-commerce is still thriving, especially purple. Purple continues to climb the web traffic ladder and has moved up another ~500 spots to be the 13,000 most popular site in the world.

For simplicity sake, I am going to use some historical numbers to estimate profits. If you'll look at previous posts that I've made then you'll see how I arrived at these numbers. There are some quick napkin calculations below. We can safely assume that the average wholesale selling price of a mattress is ~1350 dollars and we can assume that GM for wholesale is around 30%. This means the average cost of a mattress to manufacture is ~945 on average. From my previous posts, we knew that pre Covid the business was split by units, not by gross sales. On average, wholesale consumed 50% of capacity and DTC consumed 50% of capacity. In order to determine average DTC selling price then we can equation .5*1350 + .5*(DTC Price) = 1900. PRPL indicated their average selling price per mattress was ~1900.00, I found this in their s-3.
-----------------------------------
.5*1350 + .5*(DTC Price) = 1900=========== DTC average price is 2450.00, 1350 is average Wholesale price.
DTC Margin is ~62% Estimated
Wholesale Margin ~30% Estimated
----------------------------------
Historically, advertising costs have been about 30% of revenue. I have been tracking advertisement for purple and from a TV cost standpoint, they have not increased their commercial count at all in the last three months. See link, PRPL is still only performing 125 commercials per day. This commercial rate has held steady for 6 months.
https://www.ispot.tv/brands/tqU/purple-mattress

I believe purple has increased their ad spend online but I believe it will be proportional to their new capacity on a unit basis.
Previously purple had 6 Machines of capacity and spent 38M in advertising, I believe they will spend (7/6)*38M which is 44M or roughly 15M per month. Just because revenue is up, doesn't mean they will spend more per unit- they are capacity constrained and that is terribly inefficient.
----------------------------------
The following table shows my best guesses on their major category costs. This includes the gross Margin and the other costs subtracted from the Gross Margin.
April May June (Est) Total Revenue net revenue effect
Gross Margin from Wholesale 6M*30% 17.3*30% 20M*30% $13M
Gross Margin from DTC 56M*62% 71M*62% 55M*62% $112M
SG&A Costs (3.5)M (3.5)M (3.5)M ($10.5)M
Research and Development (1)M (1)M (1)M ($3)M
Advertising (15)M (15)M (15)M ($45)M
Profit Non GAAP ----------- ----------- --------- 66.5M or 1.23 EPS
Warrant Accrual ($35M)
Profit GAAP Estimated $31.5M or .59 EPS
---------------------------------------------------------------------------------------------------------------------------------------------------
If we used 66.5M, PRPL would report 1.23 EPS on an adjusted Basis.
The warrant Accrual will unfavorably push the EPS down on a GAAP basis and we will likely see something around .59 EPS. If they can achieve this for the next 4 quarters then in a years time there is a huge potential for stock increases based on the following P/E's.

GAAP est. Non GAAP Est.
EPS Annualized $2.36 $4.92
Stock price assuming 8x P/E $18.88 $39.36
Stock Price assuming 12x P/E $28.32 $59.04
Stock Price assuming 15x P/E $35.4 $73.8
Stock Price assuming 20x P/E $47.2 $98.4

People may say that this is super inaccurate..... but if you look at the following cash statement then you will realize that PRPL has been generating more than 1M per day in cash for the last two months - that is absolutely insane.

purple has generated 70M in cash in 60 days.
Mark my words, PRPL is going to be more profitable than TPX this quarter. TPX reported earnings of .68 EPS today on revenue of 665M. TPX is trading at 80+ per share. if purple reports a similar .68 EPS then it would be valued about 60% lower than TPX on an EPS basis. if purple posts EPS of ~1 dollar then it would be undervalued as compared to TPX by about 80%.

I hope your NIPS are tender now. Hope this helps you understand why I believe PRPL to be so undervalued.
submitted by dhsmatt2 to wallstreetbets [link] [comments]

DD - RXT, Amazon and Microsoft's Service Provider (Long Play)

Alright, listen up retards - this is some potentially good shit that you may be ignoring.

Rackspace Technology (RXT) IPO'd August 5th at $16.85 to a lukewarm reception, mainly due to the fact that much more formidable companies were IPO'ing the same day or week (BIGC, RKT). Since then the shares have popped a bit - most likely closing today around 18.00.

What is Rackspace?

Rackspace is a cloud computing service provider. Since most of you can barely use a keyboard, I'll explain further.
Their primary business comes from developing cloud solutions for clients utilizing third-party cloud platforms (AWS, Azure, etc.). In addition, Rackspace also provides long-term service for the systems that they develop. The industries that they are involved in is extremely diverse - from automotive maintenance to energy/government services.
Rackspace also maintains partnerships with almost all of the aforementioned major cloud computing providers present in the industry. This allows them to more effectively bargain with the providers whose platforms they are using - granting them a more advantageous price point than other competitors. These partnerships also help to retain their customer base as it allows for more complex solutions to be developed for changing circumstances.

Ok, so what?

I believe that the major mistake individual investors are making when it comes to evaluating RXT is that they believe that they are competing instead of cooperating with the likes of Amazon and Microsoft. Rackspace's goal when it comes to dealing with these giants is to leverage their service's potential to obtain a better price point for their use of large provider's cloud platforms. This allows Rackspace to generate income not only on the service contracts they provide - but also on the margin that is created from the reduced costs of infrastructure.
Because Rackspace is good at what they do, managing cloud infrastructure, these larger cloud providers see the potential to offload a part of their managed services to them at a better price - saving the cloud providers money and providing Rackspace with additional revenue. The truth of the matter, however, is that the more managed cloud business that these providers handoff to decrease costs, the more leverage and bargaining power Rackspace gains - further allowing Rackspace to reduce costs for the infrastructure they build.

Ok, fine. So what happens when Amazon and Microsoft start providing the service instead?

Fair question, you fucking retard.
In short, they won't. It's far too costly for the meager payoff that they would get from it. Also, because of the fact that Rackspace is generating revenue from the reduced costs to build their systems, it may not be economically feasible for a larger cloud provider to get into this market. Amazon AWS cannot create a leverageable position in the market by utilizing all platforms simultaneously as they can only provide AWS - the same goes for Microsoft Azure, etc.
The most likely way that one of these larger players would get into this market is buying out RXT, not forming a competitor from scratch. This seems likely as RXT is currently owned by Apollo Global Management (who took the company private in 2016). Apollo most likely took RXT public to recoup some of their initial investment, however, the company going public once again signals that the firm is willing to accept a buyout from another major player.
Also, an additional note, RXT's current market cap is low - about 3.7 billion. For a company like Microsoft or Amazon, this is a drop in the bucket. If Rackspace continues to do what they do well and there is growth in the market they exist in - one of these larger players will absolutely buy out the firm.

Positions or ban faggot

I suggest going long on shares for this one. I know you autists like options plays and have the long term horizons of an onlyfans e-girl, but there's far too much potential long-term on this one to miss out on getting shares when they're cheap. If you have some real balls you can look into February 2021 options (2/19 25c) but they're currently not trading normally due to options being introduced recently for the stock. If you can get them cheap it might be worth it, but I would suggest just dumping money into shares.
My suggestion would be to try to get in on shares at anywhere around 17.50 - 17.75, increasing position steadily up to 19.00 - 19.50. This stock has too much potential to ignore, and with only about 200M shares outstanding any good news / high profit will throw this thing to the moon.

TLDR ; Buy the dips on RXT and increase position over time

Edit: Thanks for the awards you fucking idiots
submitted by Strider291 to wallstreetbets [link] [comments]

algo trading cryptocurrencies

tldr; I'm an algorithmic cryptocurrency trader with my own cross-exchange trading platform that is performing well(ish) and I'm looking for ideas, partners, investors etc to help me push it forward.
I've been trading cryptocurrencies programmatically since 2016 with some success. For about a year I made a modest living executing arbitrage trades across mostly fiat pairs using a bot hurredly hacked together in my spare time. As time went on the margins got lower and lower and eventually I turned the system off as it just wasn't profitable enough. I wasn't sure what to do, so I went back to my career in finance while I considered my options.
Skip to the present day and I have rebuilt everything from scratch. I now have a cloud hosted (GCP), fully functional trading platform and have some new algos that are running unsupervised 24x7. The platform is far from finished of course, and like all non-trivial solutions to non-trivial problems: it has bugs, both scaling and performance problems and has a number of unfinished features. However, it does work, and cruically: it's stable, performant and reliable. In the past 12 months it has traded over $4m (roughly 40,000 executed orders and 100,000 fill events), and 99.9% of these orders are generated by my algos.
I don't do arbitrage any more, though I may resurrect that algo as my exchange fees come down. My new algos are a little more sophisticated and they seem to reliably make a small profit (between 0.1% and 0.4%). I have a number of ideas cooking away for more algos, I'm just finding it difficult to manage my time. Both the platform and the algos need a lot of work and I only have one pair of hands.
I'm actively trading on 18 exchanges and adding a new one roughly every couple of weeks. The system records and reports every order, trade, balance change, transfer, fee etc in real time using the APIs offered by each exchange. Each new exchange presents a new set of problems. Some are easy to integrate and have fairly sensible APIs, but some definitely do not. Some exchanges have helpful support, some defiantly do not. Some of the APIs change over time, some do not (although sometimes I wish they would). The more exchanges I add the more difficult it is to keep the system behaving in an rational manner. Some exchanges are so bad, though a combination of API and support, that I've had to blacklist them.
With every exchange so far, and for varying reasons, I've had to implement both the streaming (websocket / fix) AND REST APIs in order to get a working solution. Exchanges don't typically do a great job with their APIs - some are astonishingly poor IMO, and have been for years. Some reputable exchanges do completely miss some really quite basic features. Some are internally inconsistent with things like error reporting. They all report fees differently and the way they charge fees varies greatly (some don't report the trade fees at all). Each exchange of course has it's own symbols for currencies and markets, and they also change over time (typically as a result of forked blockchains: BCC -> BCH -> BCHABC...). Some use different symbols between their own REST and websocket APIs. It's not uncommon for exchanges to delist markets, but surprisingly common for them it ignore the impact on users when they do so. It's also not uncommon for exchanges to delete your old orders after they close, but some exchanges will delete your trade data too after a relatively short period of time (good luck doing your tax returns). They all employ different strategies for rate limiting. Some have helpful metadata API calls, but most don't. And of course the API docs are often either missing, misleading or blatantly incorrect. Exchanges will routinely close markets, or suspend deposits and/or withdrawals of a certain currency (which has a huge impact on prices). The good ones with have API calls that reports this data, but there are very few good ones. I could go on but you get the picture.
My application currently trades around 50-100k USD per day, and I'm planning/hoping to scale this up to 1m USD per day in a year from now.
At any one moment it's managing about 100 to 300 concurrent open orders. The order management and trade reporting is the thing I've probably spent most time on. Having an accurate and timely order management system is vital to any trading system. My order sizes are relatively small and I have a pretty solid risk management system that prevents the algos from going crazy and building up large unwanted exposures. Having said that, the number of things that can go wrong is large, and when things do go wrong they tend to go VERY wrong VERY quickly... usually while I'm out walking the dog.
I measure and record pretty much every aspect of the system so that I know when and where the time is being spent. Auditing is key. My system isn't what you'd call lightning fast right now. I don't think you would want to use it for high frequency trading. But I firmly believe that knowing where the time is being spent is over half the battle, so that's what I'm focusing on right now. Reducing latency and increasing throughput are always in the back of my mind, and although I've never intentionally designed the system to be fast, I make sure not to do anything that would needlessly slow it down.
The platform itself is built on asynchronous messaging. It is backed by a cloud hosted SQL database and (apart from the database) all components have redundancy. It's running on a hand made cluster of 12 low cost servers, but much of the workload is distributed to cloud functions. It costs me a few hundred USD per month but as I scale up I expect that to scale up accordingly.
I have a fairly basic front end (I'm not a UI person at all) built in react and firebase that I use to monitor and report the state of the system. It needs A LOT of work, but functionally it does what I need right now. I can see my orders, trades, portfolio, transfers etc in real time and I can browse and chart the market data that the system is collecting. One feature it has that I am very pleased with is the trade entry form for manual trading (its surprisingly nuanced).
I only trade on spot markets right now, so other markets (derivates, lending etc) are not supported. Until I have an idea for a algo that trades in these markets I won't be adding them. And currently I only trade on the old fashioned, centralised exchanges.
I'm writing this because I'm looking for ideas, partners, investors or even customers. I think the system has value, and it's time to move to the next level, whatever that may be. If you have an idea for an algo, adding them to the system is trivial now and if we could work out some sort of profit sharing I'd be keen to discuss it (and happy to sign an NDA of course). Feel free to reach out to me privately if you want to discuss anything.
submitted by iampomo to algotrading [link] [comments]

PRPL Q2 2020 Earnings Expectations

PRPL Q2 2020 Earnings Expectations

tl;dr - Earnings is gonna be lit!

PRPL earnings is tomorrow, 8/13, after hours. Any other date is wrong. Robinhood is wrong (why are you using Robinhood still!?!).
I'm going to take you through my earnings projections and reasoning as well the things to look for in the earnings release and the call that could make this moon even further.

Earnings Estimates

https://preview.redd.it/w3qad4gb9ng51.png?width=854&format=png&auto=webp&s=7a88656a9867d0e40710736f61974a22b5f4a631
I'm calling $244M Net Revenue with $39.75M in Net Income, which would be $0.75 Diluted EPS. I'll walk you through how I got here

Total Net Revenue

I make the assumption that Purple is still selling every mattress it can make (since that is what they said for April and May) and that this continued into June because the website was still delayed 7-14 days across all mattresses at the end of June.
May Revenue and April DTC: The numbers in purple were provided by Purple here and here.
April Wholesale: My estimate of $2.7M for Wholesale sales in April comes from this statement from the Q1 earnings release: " While wholesale sales were down 42.7% in April year-over-year, weekly wholesale orders have started to increase on a sequential basis. " I divided Q2 2019's wholesale sales evenly between months and then went down 42.7%.
June DTC: This is my estimate based upon the fact that another Mattress Max machine went online June 1, thus increasing capacity, and the low end model was discontinued (raising revenue per unit).
June Wholesale: Joe Megibow stated at Commerce Next on 7/30 that wholesale had returned to almost flat growth. I'm going to assume he meant for the quarter, so I plugged the number here to finish out the quarter at $39.0M, just under $39.3M from a year ago.

Revenue Expectations from Analysts (via Yahoo)
https://preview.redd.it/notxd6hhbng51.png?width=384&format=png&auto=webp&s=aa0453414f467aa6c5bf72ce8a8046c0ae6e62a5
My estimate of $244M comes in way over the high, let alone the consensus. PRPL has effectively already disclosed ~$145M for April/May, so these expectations are way off. I'm more right than they are.

Gross Margins

I used my estimates for Q3/Q4 2019 to guide margins in April/May as there were some one time events that occurred in Q1 depressing margins. June has higher margin because of the shift away from the low end model (which is priced substantially lower than the high end model). Higher priced models were given manufacturing priority.

Operating Expenses

Marketing and Sales
Joe mentioned in the Commerce Next video that they were able to scale sales at a constant CAC (Customer Acquisition Cost). There's three ways of interpreting this:
  1. Overall customer acquisition cost was constant with previous quarters (assume $36M total, not $93.2M), which means you need to add another $57M to bottom line profit and $1.08 to EPS, or
  2. Customer Acquisition Costs on a unit basis were constant, which means I'm still overstating total marketing expense and understating EPS massively, or
  3. Customer Acquisition Costs on a revenue basis were constant, which is the most conservative approach and the one I took for my estimate.
I straightlined the 2.2 ratio of DTC sales to Marketing costs from Q1. I am undoubtably too high in my expense estimate here as PRPL saw marketing efficiencies and favorable revenue shifts during the quarter. So, $93.2M
General and Administrative
A Purple HR rep posted on LinkedIn about hiring 330 people in the quarter. I'm going to assume that was relative to the pre-COVID furloughs, so I had June at that proportional amount to previous employees and adjusted April and May for furloughs and returns from furlough.
Research and Development
I added just a little here and straight lined it.

Other Expenses

Interest Expense
Straightlined from previous quarters, although they may have tapped ABL lines and so forth, so this could be under.
One Time and Other
Unpredictable by nature.
Warrant Liability Accrual
I'm making some assumptions here.
  1. We know that the secondary offering event during Q2 from the Pearce brothers triggered the clause for the loan warrants (NOT the PRPLW warrants) to lower the strike price to $0.
  2. I can't think of a logical reason why the warrant holders wouldn't exercise at this point.
  3. Therefore there is no longer a warrant liability where the company may need to repurchase warrants back.
  4. The liability accrual of $7.989M needs to be reversed out for a gain.
This sucker is worth about $0.15 EPS on its own.

Earnings (EPS)

I project $39.75M or $0.75 Diluted EPS (53M shares). How does this hold up to the analysts?
EPS Expectations from Analysts (via Yahoo)
https://preview.redd.it/o2i1dvk6hng51.png?width=373&format=png&auto=webp&s=27e63f7934d85393e1f7b87bf2e2066c28047202
EPS Expectations from Analysts (via MarketBeat)
https://preview.redd.it/psu5rajfhng51.png?width=1359&format=png&auto=webp&s=0612d43777c644789b14f8c5decbe36f41925f5e
These losers are way under. Now you know why I am so optimistic about earnings.
Keep in mind, these analysts are still giving $28-$30 price targets.

What to Watch For During Earnings (aka Reasons Why This Moons More)

Analysts, Institutionals, and everyone else who uses math for investing is going to be listening for the following:
  • Margin Growth
  • Warrant Liability Accrual
  • Capacity Expansion Rate
  • CACs (Customer Acquisition Costs)
  • New Product Categories
  • Cashless Exercise of PRPLW warrants

Margin Growth
This factor is HUGE. If PRPL guides to higher margins due to better sales mix and continued DTC shift, then every analyst and investor is going to tweak their models up in a big way. Thus far, management has been relatively cautious about this fortuitous shift to DTC continuing. If web traffic is any indicator, it will, but we need management to tell us that.
Warrant Liability Accrual
I could be dead wrong on my assumptions above on this one. If it stays, there will be questions about it due to the drop in exercise price. It does impact GAAP earnings (although it shouldn't--stupid accountants).
Capacity Expansion Rate
This is a BIG one as well. As PRPL has been famously capacity constrained: their rate of manufacturing capacity expansion is their growth rate over the next year. PRPL discontinued expansion at the beginning of COVID and then re-accelerated it to a faster pace than pre-COVID by hurrying the machines in-process out to the floor. They also signed their manufacturing space deal which has nearly doubled manufacturing space a quarter early. The REAL question is when the machines will start rolling out. Previous guidance was end of the year at best. If we get anything sooner than that, we are going to ratchet up.
CACs (Customer Acquisition Costs)
Since DTC is the new game in town, we are all going to want to understand exactly where marketing expenses were this quarter and, more importantly, where management thinks they are going. The magic words to listen for are "marketing efficiencies". Those words means the stock goes up. This is the next biggest line item on the P&L besides revenue and cost of goods sold.
New Product Categories
We heard the VP of Brand from Purple give us some touchy-feely vision of where the company is headed and that mattresses was just the revenue generating base to empower this. I'm hoping we hear more about this. This is what differentiated Amazon from Barnes and Noble: Amazon's vision was more than just books. Purple sees itself as more than just mattresses. Hopefully we get some announced action behind that vision. This multiplies the stock.
Cashless Exercise of PRPLW Warrants
I doubt this will be answered, even if the question is asked. I bet they wait until the 20 out of 30 days is up and they deliver notice. We could be pleasantly surprised. If management informs us that they will opt for cashless exercise of the warrants, this is anti-dilutive to EPS. It will reduce the number of outstanding shares and automatically cause an adjustment up in the stock price (remember kids, some people use math when investing). I'm hopeful, but not expecting it. The amount of the adjustment depends on the current price of the stock. Also, I fully expect PRPL management to use their cashless exercise option at the end of the 20 out of 30 days as they are already spitting cash.

Positions


https://preview.redd.it/tho65crvkng51.png?width=1242&format=png&auto=webp&s=6241ff5e8b26744f9d7119ddef7da86f163c741d
I'm not just holding, I added.
PRPLW Warrants: 391,280
PRPL Call Debit Spreads: 17.5c/25c 8/21 x90, 20c/25c 8/21 x247
Also, I bought some CSPR 7.5p 8/21 x200 for fun because I think that sucker is going to get shamed back down to $6 after a real mattress company shows what it can do.

UPDATES

I've made some updates to the model, and produced two different models:
  1. Warrant Liability Accrual Goes to Zero
  2. Warrant Liability Accrual Goes to $47M
I made the following adjustments generally:
  • I reduced marketing expenses signifanctly based upon comments made by Joe Megibox on 6/29 in this CNBC video to 30% of sales (thanks u/deepredsky).
  • I reduced June wholesale revenue to 12.6M to be conservative based upon another possible interpretation of Joe's comments in this video here. It is a hard pill to swallow that June wholesale sales would be less than May's. The only reasoning I can think of is if May caused a large restock and then June tapered back off. The previous number of $19.0M was still a retrenchment from the 40-50% YoY growth rate. I'm going to keep the more conservative number (thanks again u/deepredsky).
  • I modified the number of outstanding shares used for EPS calculations from 53M (last quarters number used on the 10-Q) to almost 73M based upon the fact that all of the warrants and employee stock options are now in the money. Math below. (thanks DS_CPA1 on Stocktwits for pointing this out)
Capital Structure for EPS Calculations
From the recent S-3 filing for the May secondary, I pulled the following:
https://preview.redd.it/qw7awg8w7sg51.png?width=368&format=png&auto=webp&s=66c884682ddb8517939468ab1e6780742f55d427
I diluted earnings by the above share count.

Model With Warrant Liability Going to Zero
https://preview.redd.it/cz2ydomi4sg51.png?width=852&format=png&auto=webp&s=53cc457a3143cabb16bfff9a1503054a9a8c0fca
Model With Warrant Liability Going to $47M
https://preview.redd.it/o2hltrgf5sg51.png?width=853&format=png&auto=webp&s=41cbe73a7aa0894a86a09ccc9179b100e9d3372d
A few people called me out on my assumption, that I also said could be wrong. My favorite callout came from u/lawschoolbluesny who started all smug and condescending, and proceeded to tell me about June 31st, from which I couldn't stop laughing. Stay in law school bud a bit longer...
https://preview.redd.it/dd4tcdue4sg51.png?width=667&format=png&auto=webp&s=d27f3ad40c702502ee62f106b6135f0db2c1e7be
One other comment he made needs an answer because WHY we are accruing MATTERS a lot!
Now that we have established that coliseum still has not exercised the options as of july 7, and that purple needs to record as a liability the fair value of the options as of june 31, we now need to determine what that fair value is. You state that since you believe that there is no logical reason that coliseum won't redeem their warrants "there is no longer a warrant liability where the company may need to repurchase warrants back." While I'm not 100% certain your logic here, I can say for certain that whether or not a person will redeem their warrants does not dictate how prpl accounts for them.

The warrant liability accrual DOES NOT exist because the warrants simply exist. The accrual exists because the warrants give the warrant holder the right to force the company to buy back the warrants for cash in the event of a fundamental transaction for Black Scholes value ($18 at the end of June--June 31st that is...). And accruals are adjusted for the probability of a particular event happening, which I STILL argue is close to zero.
A fundamental transaction did occur. The Pearce brothers sold more than 10M shares of stock which is why the exercise price dropped to zero. (Note for DS_CPA1 on Stocktwits: there is some conflicting filings as to what the exercise price can drop to. The originally filed warrant draft says that the warrant exercise price cannot drop to zero, but asubsequently filed S-3, the exercise price is noted as being able to go to zero. I'm going with the S-3.)
Now, here is where it gets fun. We know from from the Schedule 13D filed with a July 1, 2020 event date from Coliseum that Coliseum DID NOT force the company to buy back the warrants in the fundamental transaction triggered by the Pearce Brothers (although they undoubtably accepted the $0 exercise price). THIS fundamental transaction was KNOWN to PRPL at the end Q4 and Q1 as secondary filings were made the day after earnings both times. This drastically increased the probability of an event happening.
Where is the next fundamental transaction that could cause the redemption for cash? It isn't there. What does exist is a callback option if the stock trades above $24 for 20 out of 30 days, which we are already 8 out of 10 days into.
Based upon the low probability of a fundamental transaction triggering a redemption, the accrual will stay very low. Even the CFO disagrees with me and we get a full-blown accrual, I expect a full reversal of the accrual next quarter if the 20 out of 30 day call back is exercised by the company.
I still don't understand why Coliseum would not have exercised these.
Regardless, the Warrant Liability Accrual is very fake and will go away eventually.

ONE MORE THING...

Seriously, stop PMing me with stupid, simple questions like "What are your thoughts on earnings?", "What are your thoughts on holding through earnings?", and "What are your thoughts on PRPL?".
It's here. Above. Read it. I'm not typing it again in PM. I've gotten no less than 30 of these. If you're too lazy to read, I'm too lazy to respond to you individually.

submitted by lurkingsince2006 to wallstreetbets [link] [comments]

The results are in for: LEAST Valuable Player

The NBA league office announced that all awards will be officially based on play PRIOR to the bubble. With that, the cases are locked, the campaigns are closed, and the voting will begin.
While the media may focus on the MVP award and other prestigious honors, reddit has the distinct honor of awarding the LVP. The LEAST Valuable Player. It's a tradition that dates back to 2016-17, when aging Indiana SG Monta Ellis won the inaugural trophy and then promptly disappeared from the NBA forever. In 2017-18, Minnesota SG Jamal Crawford won the (dis)honor with some incredibly bad defensive numbers. Last season, New Orleans SF Solomon Hill won LVP by helping to sink a drowning team and accelerating Anthony Davis' decision to fly the coop.
Before we announce this year's winner, let's review the criteria and caveats:
--- Obviously, the worst players in the league are the ones who sit at the end of the bench and don't get any playing time. However, this award focuses on players who log a decent amount of minutes and consequently affected their team's play the most. Simply put: the more you play, the more damage you can do.
--- And that actual "damage" is important. If you're on a tanking team, no one cares about your poor play; it may even be a positive. I'm also ignoring young players (under 21) who are still developing and can't be expected to be solid players yet.
--- Similarly, we don't want to judge players within the context of their salary any more than the actual MVP does. We also do not weigh in injuries either. For example, the Wizards would have a hard time competing with John Wall on the sidelines (0 games played, $32M in salary), but we want to focus on players' on-court performance instead.
dishonorable mentions
PG Mike Conley, Utah: 28.6 minutes per game, -0.80 RPM
We're using Mike Conley to reiterate that the LVP does NOT factor salary into the equation any more than the MVP does. But if it did, Mike Conley and his $33M salary may be in trouble.
It was a disastrous start to the season for Conley. Playing in a new role as a second fiddle to another guard, he could never find his groove. His assists plummeted (down to 4.3 per game), his free-throw attempts cut in half (from 5.8 to 2.9), and he only shot 42.9% from two-point range. That said, he still shot pretty well from 3 (37.6%) and played OK defense, keeping him off our official ballot.
SF Miles Bridges, Charlotte: 30.7 minutes per game, -2.68 RPM
Like Mike Conley, Miles Bridges seems like a great guy whom you'd hate to criticize. Alas, that's our exercise here. Caught in between positions, Bridges hasn't been able to figure out his rhythm on offense in the NBA either. He hasn't shot well (33% from three, 48.6% from two) and doesn't get to the line enough (2.0 FTA) to make up for it. The advanced stats get even worse from there (although to be fair, they get dragged down by playing in a bad starting lineup.)
Fortunately for him, Bridges is spared by his youth. At 22, he's technically over our "21 year old" threshold, but it still feels unfair to pick on his growing pains as a sophomore. Perhaps in time, he can find a role that can take advantage of his athleticism and talent. But be warned: the clock is ticking. We're taking the kid gloves off soon. Bridges and fellow analytics-allergic Kevin Knox (-7.7 RPM!) will be entering Year 3 next season and will need to step their games up to avoid LVP discussion.
SF Kyle Kuzma, L.A. Lakers: 24.6 minutes per game, -0.74 RPM
Kyle Kuzma can score if need be, but his skill set never made him a natural fit to play third banana to superstars like LeBron James and Anthony Davis. He's not a 3+D player -- he's more of a no-3 (30% this year) no-D player. At the same time, the LVP is about negative impact, and it's hard to find much of consequence here. After all, the Lakers still finished with the # 1 record in the West. Kuzma struggling to find his way is like a tree falling in the woods or a person farting in an empty elevator – ultimately it didn't matter.
SF Andre Iguodala, Memphis/Miami
It feels like ancient history now, but this past offseason, the Memphis Grizzlies acquired Andre Iguodala in a trade (under the presumption he may be dealt again.) According to official reports, Iguodala and the Grizzlies MUTUALLY decided that he wouldn't play for Memphis and wouldn't even report to the team in the meantime. Okay. Fine. We'll go along with that.
Still, that situation leaves a sour taste in the LVP headquarters. Memphis turned out to be better than expected, and could have used an extra rotational player. And even if Iguodala wouldn't have helped much on the court, he could have been a valuable mentor for their young kids. That's the least you can expect for a nice $15M in salary.
our official top 5 LVP ballot
(5) PF Anthony Tolliver (POR, SAC, MEM): 15.6 minutes per game, -3.60 RPM
I've always had a soft spot for the wise ol' owl, Anthony Tolliver. He's reportedly a great teammate and locker room presence. He also started to develop into an effective stretch four towards the end of this career.
But alas, the end of his career may have snuck up on us sooner than we expected. Tolliver disappointed for Minnesota last season, and completely flopped in his return to Portland. At age 34, he doesn't seem to be a viable rotation player anymore. He didn't play quite enough to merit LVP, but he still played more than he should have.
There's a chance Tolliver comes back next year to serve as a veteran mentor and pseudo-assistant coach somewhere, but it's more likely that he retires. If he does, he'll have played for 10 different franchises in his not-so-illustrious but very respectable career.
(4) SG Bryn Forbes, San Antonio: 25.1 minutes per game, -0.95 RPM
The NBA is all about shooting these days, and Bryn Forbes can shoot. He's hit an even 40.0% from three during his NBA career so far, and wasn't too far removed from that this season with 38.8% on 6.0 attempts per game. As a result, his true shooting percentage (57%) was above average. The Spurs lacked spacers, and Forbes fit that bill.
So what's the problem...? Turns out, basketball is more than a halfcourt game. And whenever the ball crosses that pesky midcourt line, Bryn Forbes starts to become a liability.
At only 6'3", Forbes is undersized to play the SG position, which is where the Spurs played him 74% of the time (according to basketball-reference.) Partly due to those athletic limitations, he only registered 0.5 steals per game, and blocked a grand total of 0 shots in his 1579 minutes of action. The advanced stats get ugly; Forbes ranks near the bottom at his position in DRPM, DBPM, all the alphabet formulas that you can cook up.
At the end of the day, LVP is about negative impact, and there's plenty here. Forbes is not a bad player in a vacuum, but he did not help the Spurs this year. In fact, their undersized lineup is a big reason why they're struggling so much on defense (25th in the NBA). As a direct result, they're on track to miss the playoffs for the first time in decades.
(3) SF Mario Hezonja, Portland: 16.3 minutes per game, -2.79 RPM
During the entire run of the Damian Lillard - C.J. McCollum era, Portland has struggled to figure out their wing rotation. That would be tested even more this season, with familiar faces like Moe Harkless, Al-Farouq Aminu, and Evan Turner slipping out the door. The trials and tribulations kept coming like Damian Lillard was Job, as injuries ravaged the Blazers' new depth chart. The team didn't need a star to emerge at forward -- but they needed somebody. Anybody.
In theory, that player should have been Mario Hezonja, a former lottery pick and a live body with good athleticism and size at 6'8". Signed this summer for a modest price ($1.7M), Hezonja had the chance to jumpstart his NBA career with a major opportunity on the team. Instead, he flopped like Marcus Smart taking a phantom elbow.
Hezonja's biggest problem is that, at age 25, he still hasn't found his feel on the court. He's not a good shooter (32.8% from three), and doesn't use his athleticism to find his way to the line (1.1 attempts per game.) He was a non-factor (5 PPG, 3 RPG) on a team that desperately needed him to step up. In fact, the Blazers were so desperate for help that they not only signed Carmelo Anthony, but they played him over 32 minutes a game.
Again, we see a real "LVP" candidacy here with a direct effect on the standings. The Blazers' getting a big fat nothing from Hezonja was a major part of their struggle to get to .500 this season.
(2) C Dewayne Dedmon, SAC/ATL: 17.6 minutes per game, -2.51 RPM
We're not supposed to factor in salaries into this equation, but Dewayne Dedmon's situation merits a mention for context. The Sacramento Kings signed the big man to a head-scratching 3-year, $40M deal this summer (seriously.) Clearly, GM Vlade Divac thought his young Kings were only a few veterans away from making the playoffs, bringing in (and over-paying) Dedmon, Cory Joseph, and Trevor Ariza.
Among the three, Dedmon turned out to be the most disappointing for several reasons. He didn't play well to start the season, and got usurped in the rotation by underrated Richaun Holmes. Rather than suck it up, take a deep breath, and take a relaxing dive in his new Scrooge McDuck money pool, Dedmon started to whine and complain and push for a trade. For a team that was struggling, Dedmon's headache became the last thing they needed. Ultimately, they ditched him back to where he came from in Atlanta.
Now, being difficult and being a prima donna isn't enough to get you LVP honors. You have to stink on the court as well. And sure enough, Dedmon started to check those boxes. Billed as a stretch five after hitting some threes in Atlanta, Dedmon lost his shot in the SMF airport baggage claim. He shot only 19.7% from three for the Kings, registering a 47.3% true shooting percentage on the season. His defense is OK, but it's not good enough make up for his poor offensive play. He's not bad enough to get LVP, but he hurt his team this year.
(1) PG Isaiah Thomas, Washington: 23.1 minutes per game, -2.75 RPM
We've awarded three LVP trophies in the past, and a familiar pattern is starting to emerge. The most dangerous players aren't necessarily the bad players; they're the players who used to be good. Because of their prior success, they tend to get overplayed by their coaches and drag their teams down with them.
It wasn't too long ago that Isaiah Thomas found himself in the MVP conversation for the Boston Celtics, as his incredible shotmaking helped make up for any defensive limitations he may have as a 5'9" player. That said, a small player like Thomas is always going to have a thin margin for error to remain a winning player. He needs to be GREAT offensively to make up for his defense. Unfortunately, his offense has not been great since his infamous injury. He can still make shots (hitting 41.3% of his threes), but he's not getting inside the paint and not getting to the free-throw line (1.9 attempts per game.) As a result, his true-shooting percentage lagged to 53.1%, well below league average.
If Isaiah Thomas isn't making scoring efficiently, then what is he doing to help a team win? He's not a great distributor (3.7 assists per game.) He's a very poor rebounder (1.7 per game.) And yes, that defense is still a major problem. According to ESPN's RPM metric, Thomas graded as a -4.2 impact per 100 possessions, the second worst in the league at PG after Trae Young. Basketball-reference lists his "defensive rating" at 121. For comparison's sake, the worst team defense in the league still held teams under 116. (That worst team? The Wizards.)
You can make an argument that there's still a place for Thomas in the NBA as a sparkplug scorer off the bench. Alas, that's not how the Wizards had been using him this season. He started 37 of 40 games for the team. Largely as a result of that, the Wizards' starting lineup was atrocious defensively. Fellow starters like Bradley Beal and Rui Hachimura ranked toward the bottom of their position in defensive metrics as well. When your lineup stinks defensively, a good coach may look in the mirror and say: hey, maybe we need a change here. Sadly, quick reactions are not Scottie Brooks' strong suit. He has the type of sloth-like speed that even frustrate workers at the DMV. The Wizards eventually dumped IT, but it took far too long to make that shift.
To be fair, the Wizards' options at point guard were limited with John Wall injured. Veteran Ish Smith is mediocre right now, and Shabazz Napier arrived late in the season. Still, the point here is: almost any competent point guard (like a Napier) would have helped the Wizards more than Isaiah Thomas. He had become a negative for them. The cold hard truth is that: it's very difficult to win basketball games with Thomas starting. And given that, he is our official LVP.
submitted by ZandrickEllison to nba [link] [comments]

The imminent slide of UBER

I made this post yesterday, but I wasn't happy with the details so I quickly deleted it in the interest of taking more time on it. For disclosure, I am short on UBER. This post could apply to other gig services, but I am focused on Uber.
As most of us are aware, Uber has not been successful at all in a traditional business sense - that is that they do not make money and have spent the last decade burning investor cash. How bad is it? Let's look at a few fundamentals, sourced from E-Trade:
TTM Net Profit Margin (-50.72%)
Overall, UBER lost 150.72% of the revenue that they collected, meaning that for every $100 they made, $150.72 was spent to "gain" it. Their TTM Operating Margin was -48.90% which indicates to me that it is the main contributer to such a negative bottom line. For the past decade Uber has been fine operating on this loss in order to gain market share - but how long can this unsustainable model be propped up?
TTM Price/Sales (3.77x)
Currently, Uber is trading at a price almost 4 times its sales which result in a negative income anyway. This is a money pit.
TTM Return on Investment Capital (-29.62%)
Need I say more? This is okay for a startup, but is 10 years and global operations still a "startup"?
-----------------------------------------------------------------------------------------------------------------------------------------------------
So those are bad, but why do I think the slide is imminent? Mostly related to their ongoing and especially current legal issues.
On the first of this year, California's Assembly Bill 5 went into effect. It's a law so there is a ton to it, but the context we care about is the "gig economy worker" part which have to do with classifying gig workers as employees which come with other costs and benefits that Uber (and other Transportation Network Companies, or "TNCs") have been able to get around and limit further losses since their inception, to the dismay of taxis and other traditional permitted transportation operators.
This is America, so Uber has not complied with this. As a consumer, I've noticed drops in availability on their platform lately so I suspect they are now metering workers to some degree to limit full-time employment but that's just anecdotal speculation.
10 days ago, a California judge granted a preliminary injunction essentially saying enough is enough and that these TNCs and other gig companies must comply. There was a 10-day period for the potential to grant an appeal as filed by Uber, which expires at the end of today. Please correct me if I've interpreted this incorrectly but it seems that if TNCs do not receive injunctive relief by the end of today, 08/20, they will cease operating in the State of California as of 08/21. This seems to have been indicated by Uber and Lyft as well.
If it is not easy to see, California is one of Uber's largest markets. I don't know the exact numbers, but I've read that most of Uber's business comes from 5 US cities, two of which are Los Angeles and San Francisco. I would guess that California probably accounts for at least 25% of Uber's revenue. It gets more dangerous than this. Other states have already started to draft their own legislation regarding gig economy workers, especially Illiinois, New Jersey, and New York.
For all of these reasons, I see an imminent drop coming for Uber. What do you think?
Edit: as of roughly 0930 PT Lyft has indicated it will suspend service at midnight tonight.
Edit: as of roughly 1145 PT an emergency stay has been granted meaning the services will continue for now out of compliance with the law
submitted by CoalFlavored to stocks [link] [comments]

$PSTG: PURE STORAGE for them, PURE TENDIES for you

$PSTG: PURE STORAGE for them, PURE TENDIES for you
This is actually my first DD I've ever posted so fuck you and forgive me if this doesn't work out for you.I've been looking at $PSTG for a while now and if my buying power didn't get so fucked from my decision to buy 8/7 UBER puts, I would have been already all over this play.
What had got me looking into Pure Storage was an unusual options activity alert. I've looked into this company before but didn't entirely understand what they do. Now after looking at them again, I'm still not exactly sure wtf they do....BUT I've gotten a better clue. Basically what I got from my research is that these guys fuck with "all-FLASH data storage solutions (enabling cloud solutions and other low-latency applications where tape/disk storage does not meet the needs)."......and ultimately what this all means to me is that these are the motherfuckers making those stupid fast laser money printers with the rocket ships attached. And that's something I'm interested in.
Now, here is the DailyDick you all degenerates have all been fiending for:
Fundamentally: PureStorage remains one of the few hardware companies in tech that is consistently growing double motherfucking digits, yet remains constantly cucked and neglected by investors (trading at 1.9x EV/Sales).
https://preview.redd.it/ek7ugjsewnf51.png?width=1118&format=png&auto=webp&s=f9c7e72c95e450a105e44223937422d896eeeb21
The 36 Months beta value for PSTG stock is at 1.62. 74% Buy Rating on RH. PSTG has a short float of 7.28% and public float of 243.36M with average trading volume of 3.16M shares. This was trading at around $18 on Wednesday 8/5 when I started writing this and as of right now, it's about $17.33 💸
The company has a market capitalization of ~$4.6 billion. In the last quarter, PSTG reported a ballin'-ass profit of $256.82 million. Pure Storage also saw revenues increase to $367.12 million. IMO, they should rename themselves PURE PROFIT. As of 04-2020, they got the cash monies flowing at $11.32 million . The company’s EBITDA came in at -$62.81 million which compares very fucking well among its dinosaur ass peers like HPE, Dell, IBM and NetApp. Pure Storage keeps taking market share from them old farts while growing the chad-like revenue #s of 33% in F2019, 21% in F2020, and 12% in F1Q21.
Chart of their financial growth since IPO in 2015:
https://preview.redd.it/gwlmy82v4nf51.png?width=640&format=png&auto=webp&s=b6508cd5f641da4086b70d8b8007da034e982fd7
At the end of last quarter, Pure Storage had cash, cash equivalents and marketable securities of $1.274B, compared with $1.299B as of Feb 2, 2020. The total Debt to Equity ratio for PSTG is recording at 0.64 and as of 8/6, Long term Debt to Equity ratio is at 0.64.Earning highlights from last quarter:
  • Revenue $367.1 million, up 12% year-over-year
  • Subscription Services revenue $120.2 million, up 37% year-over-year
  • GAAP gross margin 70.0%; non-GAAP gross margin 71.9%
  • GAAP operating loss $(84.9) million; non-GAAP operating loss $(5.4) million
  • Operating cash flow was $35.1 million, up $28.5 million year-over-year
  • Free cash flow was $11.3 million, up $29.0 million year-over-year
  • Total cash and investments of $1.3 billion
I bolded the Subscription Services Revenue bullet because to me that's a big deal. Pure Storage keeps them coming back with products such as Pure-as-a-service and Cloud Block Store and everybody knows that the recurring revenue model is best model. Big ass enterprises buy storage from vendors such as Pure Storage in the cloud to prevent vendor lock-in by the cloud providers. $$$ >!💰<
What are Pure Storage's other revenue drivers? Well these motherfuckers also have the products to address the growth of Cloud storage as well as the products to drive the growth of on-prem storage. For on-prem data center, Pure sells Flash Array to address block storage workloads (for databases and other mission-critical workloads) and FlashBlade for unstructured or file data workloads. On-prem storage revenue is mainly driven by legacy storage array replacement cycle.
https://preview.redd.it/01su6chrwnf51.png?width=1129&format=png&auto=webp&s=16e6a705f9392291bc0c3932c815802d9101365e
So far, it seems like Pure Storage's obviously passionate and smart as fuck CEO has been spot on with his prediction of the flash storage sector's direction. Also seems like he's not camera shy either. Pure Storage's "Pure-as-a-Service and Cloud Block Store" unified subscription offerings is fo sho gaining momentum it. This shit is catching on with enterprises, both big and small. COVID-19 increased the acceleration of our digital transformation and the subsequent shift to the cloud. This increased demand in data-centers is going to drastically help Pure Storage's future top and bottom line. To top it off, NAND prices are recovering! (inferred from MU earnings). I expect Pure Storage to get some relief on the pricing front because of this which obviously in turn should improve revenues.
PSTG's numbers look pretty good to me so far but are they a good company overall? Even when scalping and trading, I don't like to fuck with overall shitty companies so I always check for basic things like customer satisfaction, analyst ratings/targets, broad-view industry trends, and hedge fund positioning.. that sort of thing.Pure Storage stands out in all of these fields for me.
https://preview.redd.it/4n0e5nve5of51.png?width=373&format=png&auto=webp&s=495416bb6f5a2dab77f3ac483ca4d9510b39037c
Customers like Dominos Pizza and many others all seem to be happy AF with no issues. I can hardly even find a negative review online. Their products seems to be universally applauded. Gartner and other third party independent analysts also consider Pure Storage's product line-up some of the best in the industry.
The industry average for this sector is a piss poor 65.Pure Storage has a 2020 Net Promoter Score of 86
https://preview.redd.it/3w51io8yvmf51.png?width=698&format=png&auto=webp&s=4f7d06825d0ad9d126216e5069af2f9c3636f86a
Enterprises are upgrading their existing storage infrastructure with newer and more modern data arrays, based on NAND flash. They do this because they're forced to keep up with the increasing speed of business inter-connectivity. This shit is the 5g revolution sort to speak of the corporate business world. Storage demands and needs aren't changing because of the pandemic and isn't changing in the future. The newer storage arrays are smaller, consume less power, are less noisy and do not generate excess heat in the data center and hence do not need to be cooled like the fat fucks at IBM need to be. Flash storage arrays in general are cheaper to operate and are extremely fast, speeding up applications. Pure Storage by all accounts makes the best storage arrays in the industry and continues to grow faster than the old school storage vendors like bitchass NetApp, Dell, HPE and IBM.
Pure Storage’s market share was 12.7% in C1Q20 and was up from 10.1% in the prior year - LIKE A PROPER HIGH GROWTH COMPANY.HPE, NetApp and IBM, like the losers they are, lost market share.According to blocksandfiles.com, AFA vendor market share sizes and shifts are paraphrased below:
  • “Dell EMC – 34.8% (calculated $766m) vs. 33.7% a year ago
  • NetApp – 19.3% at $425m vs. 26.7% a year ago
  • Pure Storage – 12.7% at calculated $279.7m vs. 10.1% a year ago
  • HPE – 8.4% – $185m vs. 10% a year ago"
Pure has been gaining marketshare almost every year since it began selling storage arrays in 2011. Pure Storage is consistently rated the highest for the completeness of vision as this chart shows:
https://preview.redd.it/5agj17gcgnf51.png?width=428&format=png&auto=webp&s=da9c6389baccab85261d6e0f71b3474e84b90d3c
Hedge Funds are on this like flies on shit.
Alliancebernstein L.P. grew its position in Pure Storage by 0.5% in the 4th quarter. Alliancebernstein L.P. now owns 104,390 shares of the technology company’s stock worth $1,786,000 after purchasing an additional 560 shares during the last quarter.
Legal & General Group Plc grew its position in Pure Storage by 0.3% in the 1st quarter. Legal & General Group Plc now owns 258,791 shares of the technology company’s stock worth $3,213,000 after purchasing an additional 753 shares during the last quarter.
Sunbelt Securities Inc. acquired a new stake in Pure Storage in the 4th quarter worth $4,106,000.
CENTRAL TRUST Co grew its position in Pure Storage by 79.8% in the 2nd quarter. CENTRAL TRUST Co now owns 3,226 shares of the technology company’s stock worth $56,000 after purchasing an additional 1,432 shares during the last quarter.
Northwestern Mutual Wealth Management Co. grew its position in Pure Storage by 203.0% in the 1st quarter. Northwestern Mutual Wealth Management Co. now owns 2,312 shares of the technology company’s stock worth $28,000 after purchasing an additional 1,549 shares during the last quarter.
Also, everybody's favorite wall street TSLA bull, Cathie Wood has been busy steadily purchasing big lots of PSTG for her ARK ETF funds for a while now...Even going as far as selling TSLA in order to re-balance!
https://preview.redd.it/zjxuakjosnf51.png?width=1125&format=png&auto=webp&s=f34abdd3b35791eb207d31d72ea0f6fb11beec30
https://preview.redd.it/bkf1uzb2tmf51.png?width=2048&format=png&auto=webp&s=a9870ec41cfb4ce468ba61d83f2f8a4151927a4e
Hedge funds and other institutional investors own 78.93% of the company’s stock and it seems like more are piling in every day.
Tons of active options, too -Pretty good volume lately with the spreads looking decent.
Over 5,000 September $20 Calls added just on 8/3 alone 🤔
Order flow helps my thesis here, showing a recent influx of big dick money moving into PSTG.
https://preview.redd.it/liychuhblnf51.png?width=592&format=png&auto=webp&s=ca6a60d54a9eb8bd9e32e0ef70992b8282c29e70
Google Search Trends showing uptick in interest: SPY420 baby
https://preview.redd.it/joo0b9wxinf51.png?width=1710&format=png&auto=webp&s=24eb18f18be18b9b771ff1911c09c5479ba2f1a0
Robinhood Trends showing the YOLO is trending up
https://preview.redd.it/4gk5yjdxmnf51.png?width=1538&format=png&auto=webp&s=76c4b114c133c493c84386d1705f85229f5f7d44
Increased job postings on LinkedIn all across the globe, further supporting the idea that Pure Cloud Adoption is looking strong.
https://preview.redd.it/5zenasprznf51.png?width=1092&format=png&auto=webp&s=a492e227e2208fe89925c9b7fe365634f7ffde6a
Technically: This broke out through down-trend line a couple of days ago and as of right now looks to be pretty oversold. Looks like its found support at the 50 DMA and zooming out , the chart just looks like to me that it's coiling up for a big breakout.
https://preview.redd.it/wxtz8minmnf51.png?width=1208&format=png&auto=webp&s=7baabbd3e8f97dfc8bd0d5bfa512613c2eea4921
These fucking shorts are going to get squeezed out hard. Potential short squeeze coming?
https://preview.redd.it/lh8lp08funf51.png?width=1533&format=png&auto=webp&s=921b6684369e25e94f00ed96a404458028e540c8
**So what's the play?**I'd like to see RSI break out of the downtrend and the divergence between price & momentum ends at some point. If/when RSI breaks out, I want to play this thing aggressively with bullish call calendar spreads....THAT IS IF I HAD SOME FUCKING BUYING POWER (FUCK YOU UBER)....Soooo really what I'll be doing is asking my wife's boyfriend sometime this weekend for a loan. That way on Monday I can buy some $PSTG 9/18 $17.5 & $20 calls at open and YOLO my saddness away for a week.God forbid, I might even buy of those things called "shares" I heard about from /investing if at all possible because in all honesty, I really do feel like this is a good company to hold in a long term growth portfolio.Pure Storage is NOT looking like your average KODK prostitute to flip or scalp and actually more like someone you'd bring home to your dads.
EARNING DATE: 8/25
Pure Storage has a history of beating estimates and rocketing up. Over the last 20 quarters, the company beat revenue 17 quarters by an average of $4.9 million or about 3%. Out of the three times that the company missed on revenues, once was due to supply fuck-ups at one of its distributors and the other two times were due to Average Selling Prices declining faster than the company forecasted. Higher-than-expected ASP declines (due to NAND oversupply) is one of the risks of the storage business...but then again NAND prices look to be recovering now if MU's earning isn't fucking with us and telling us fibs. Big money is forecasting revenue to be around $396 million, essentially flat year-over-year, and EPS of a disrespectful ass penny....Fuck that conservative ass guidance! I think PSTG is going to blow that shit out the water. This chart shows Pure Storage’s past performance and we all know for sure that past performance = future results.....right?
https://preview.redd.it/4xflpezdhnf51.png?width=623&format=png&auto=webp&s=c1660a80a1a1821ef8098791a8cee632e25f1445
My Prediction: After ER8/25, Pure Storage will hit new 52 week highs.$20.50 - $23.50 is my guess. Bold prediction, $27.50+ by the EOY and $50 by December 2021.
tldr: PSTG 9/18 $17.5 & $20 calls

edit: for those that bought into this, I'm in this with you!
Let's pray for a rebound next week. also, Fuck Cisco!
submitted by OnYourSide to wallstreetbets [link] [comments]

[NYTimes] Sources describe horror stories of young and inexperienced investors on Robinhood, many engaging in riskier trades at far higher volumes than at other firms

https://www.nytimes.com/2020/07/08/technology/robinhood-risky-trading.html
Richard Dobatse, a Navy medic in San Diego, dabbled infrequently in stock trading. But his behavior changed in 2017 when he signed up for Robinhood, a trading app that made buying and selling stocks simple and seemingly free.
Mr. Dobatse, now 32, said he had been charmed by Robinhood’s one-click trading, easy access to complex investment products, and features like falling confetti and emoji-filled phone notifications that made it feel like a game. After funding his account with $15,000 in credit card advances, he began spending more time on the app.
As he repeatedly lost money, Mr. Dobatse took out two $30,000 home equity loans so he could buy and sell more speculative stocks and options, hoping to pay off his debts. His account value shot above $1 million this year — but almost all of that recently disappeared. This week, his balance was $6,956.
“When he is doing his trading, he won’t want to eat,” said his wife, Tashika Dobatse, with whom he has three children. “He would have nightmares.”
Millions of young Americans have begun investing in recent years through Robinhood, which was founded in 2013 with a sales pitch of no trading fees or account minimums. The ease of trading has turned it into a cultural phenomenon and a Silicon Valley darling, with the start-up climbing to an $8.3 billion valuation. It has been one of the tech industry’s biggest growth stories in the recent market turmoil.
But at least part of Robinhood’s success appears to have been built on a Silicon Valley playbook of behavioral nudges and push notifications, which has drawn inexperienced investors into the riskiest trading, according to an analysis of industry data and legal filings, as well as interviews with nine current and former Robinhood employees and more than a dozen customers. And the more that customers engaged in such behavior, the better it was for the company, the data shows.
Thanks for reading The Times. Subscribe to The Times More than at any other retail brokerage firm, Robinhood’s users trade the riskiest products and at the fastest pace, according to an analysis of new filings from nine brokerage firms by the research firm Alphacution for The New York Times.
In the first three months of 2020, Robinhood users traded nine times as many shares as E-Trade customers, and 40 times as many shares as Charles Schwab customers, per dollar in the average customer account in the most recent quarter. They also bought and sold 88 times as many risky options contracts as Schwab customers, relative to the average account size, according to the analysis.
The more often small investors trade stocks, the worse their returns are likely to be, studies have shown. The returns are even worse when they get involved with options, research has found.
This kind of trading, where a few minutes can mean the difference between winning and losing, was particularly hazardous on Robinhood because the firm has experienced an unusual number of technology issues, public records show. Some Robinhood employees, who declined to be identified for fear of retaliation, said the company failed to provide adequate guardrails and technology to support its customers.
Those dangers came into focus last month when Alex Kearns, 20, a college student in Nebraska, killed himself after he logged into the app and saw that his balance had dropped to negative $730,000. The figure was high partly because of some incomplete trades.
“There was no intention to be assigned this much and take this much risk,” Mr. Kearns wrote in his suicide note, which a family member posted on Twitter.
Like Mr. Kearns, Robinhood’s average customer is young and lacks investing know-how. The average age is 31, the company said, and half of its customers had never invested before.
Some have visited Robinhood’s headquarters in Menlo Park, Calif., in recent years to confront the staff about their losses, said four employees who witnessed the incidents. This year, they said, the start-up installed bulletproof glass at the front entrance.
“They encourage people to go from training wheels to driving motorcycles,” Scott Smith, who tracks brokerage firms at the financial consulting firm Cerulli, said of Robinhood. “Over the long term, it’s like trying to beat the casino.”
At the core of Robinhood’s business is an incentive to encourage more trading. It does not charge fees for trading, but it is still paid more if its customers trade more.
That’s because it makes money through a complex practice known as “payment for order flow.” Each time a Robinhood customer trades, Wall Street firms actually buy or sell the shares and determine what price the customer gets. These firms pay Robinhood for the right to do this, because they then engage in a form of arbitrage by trying to buy or sell the stock for a profit over what they give the Robinhood customer.
This practice is not new, and retail brokers such as E-Trade and Schwab also do it. But Robinhood makes significantly more than they do for each stock share and options contract sent to the professional trading firms, the filings show.
For each share of stock traded, Robinhood made four to 15 times more than Schwab in the most recent quarter, according to the filings. In total, Robinhood got $18,955 from the trading firms for every dollar in the average customer account, while Schwab made $195, the Alphacution analysis shows. Industry experts said this was most likely because the trading firms believed they could score the easiest profits from Robinhood customers.
Vlad Tenev, a founder and co-chief executive of Robinhood, said in an interview that even with some of its customers losing money, young Americans risked greater losses by not investing in stocks at all. Not participating in the markets “ultimately contributed to the sort of the massive inequalities that we’re seeing in society,” he said.
Mr. Tenev said only 12 percent of the traders active on Robinhood each month used options, which allow people to bet on where the price of a specific stock will be on a specific day and multiply that by 100. He said the company had added educational content on how to invest safely.
He declined to comment on why Robinhood makes more than its competitors from the Wall Street firms. The company also declined to comment on Mr. Dobatse or provide data on its customers’ performance.
Robinhood does not force people to trade, of course. But its success at getting them do so has been highlighted internally. In June, the actor Ashton Kutcher, who has invested in Robinhood, attended one of the company’s weekly staff meetings on Zoom and celebrated its success by comparing it to gambling websites, said three people who were on the call.
Mr. Kutcher said in a statement that his comment “was not intended to be a comparison of business models nor the experience Robinhood provides its customers” and that it referred “to the current growth metrics.” He added that he was “absolutely not insinuating that Robinhood was a gambling platform.”
ImageRobinhood’s co-founders and co-chief executives, Baiju Bhatt, left, and Vlad Tenev, created the company to make investing accessible to everyone. Robinhood’s co-founders and co-chief executives, Baiju Bhatt, left, and Vlad Tenev, created the company to make investing accessible to everyone.Credit...via Reuters Robinhood was founded by Mr. Tenev and Baiju Bhatt, two children of immigrants who met at Stanford University in 2005. After teaming up on several ventures, including a high-speed trading firm, they were inspired by the Occupy Wall Street movement to create a company that would make finance more accessible, they said. They named the start-up Robinhood after the English outlaw who stole from the rich and gave to the poor.
Robinhood eliminated trading fees while most brokerage firms charged $10 or more for a trade. It also added features to make investing more like a game. New members were given a free share of stock, but only after they scratched off images that looked like a lottery ticket.
The app is simple to use. The home screen has a list of trendy stocks. If a customer touches one of them, a green button pops up with the word “trade,” skipping many of the steps that other firms require.
Robinhood initially offered only stock trading. Over time, it added options trading and margin loans, which make it possible to turbocharge investment gains — and to supersize losses.
The app advertises options with the tagline “quick, straightforward & free.” Customers who want to trade options answer just a few multiple-choice questions. Beginners are legally barred from trading options, but those who click that they have no investing experience are coached by the app on how to change the answer to “not much” experience. Then people can immediately begin trading.
Before Robinhood added options trading in 2017, Mr. Bhatt scoffed at the idea that the company was letting investors take uninformed risks.
“The best thing we can say to those people is ‘Just do it,’” he told Business Insider at the time.
In May, Robinhood said it had 13 million accounts, up from 10 million at the end of 2019. Schwab said it had 12.7 million brokerage accounts in its latest filings; E-Trade reported 5.5 million.
That growth has kept the money flowing in from venture capitalists. Sequoia Capital and New Enterprise Associates are among those that have poured $1.3 billion into Robinhood. In May, the company received a fresh $280 million.
“Robinhood has made the financial markets accessible to the masses and, in turn, revolutionized the decades-old brokerage industry,” Andrew Reed, a partner at Sequoia, said after last month’s fund-raising.
Image Robinhood shows users that its options trading is free of commissions. Robinhood shows users that its options trading is free of commissions. Mr. Tenev has said Robinhood has invested in the best technology in the industry. But the risks of trading through the app have been compounded by its tech glitches.
In 2018, Robinhood released software that accidentally reversed the direction of options trades, giving customers the opposite outcome from what they expected. Last year, it mistakenly allowed people to borrow infinite money to multiply their bets, leading to some enormous gains and losses.
Robinhood’s website has also gone down more often than those of its rivals — 47 times since March for Robinhood and 10 times for Schwab — according to a Times analysis of data from Downdetector.com, which tracks website reliability. In March, the site was down for almost two days, just as stock prices were gyrating because of the coronavirus pandemic. Robinhood’s customers were unable to make trades to blunt the damage to their accounts.
Four Robinhood employees, who declined to be identified, said the outage was rooted in issues with the company’s phone app and servers. They said the start-up had underinvested in technology and moved too quickly rather than carefully.
Mr. Tenev said he could not talk about the outage beyond a company blog post that said it was “not acceptable.” Robinhood had recently made new technology investments, he said.
Plaintiffs who have sued over the outage said Robinhood had done little to respond to their losses. Unlike other brokers, the company has no phone number for customers to call.
Mr. Dobatse suffered his biggest losses in the March outage — $860,000, his records show. Robinhood did not respond to his emails, he said, adding that he planned to take his case to financial regulators for arbitration.
“They make it so easy for people that don’t know anything about stocks,” he said. “Then you go there and you start to lose money.”
submitted by jayatum to investing [link] [comments]

Q2 2020 earnings thread

Didn’t see one posted yet so let this be the megathread that cliff can sticky or whatever. I’ll update this as info comes in and maybe live blog the call if I make it to my computer in time
Webcast info can be found at:
https://ir.tesla.com/events/event-details/tesla-inc-q2-2020-financial-results-and-qa-webcast
The call starts at 2:30pm PDT
Q2 report:
https://ir.tesla.com/static-files/f41f4254-f1cc-4929-a0b6-6623b00475a6
Call live blog (times in PDT):
2:30: "Call starting shortly"
2:32: Tesla director of investor relations
2:33: Elon opening remarks. Good job to the Tesla team. 4th consecutive profitable quarter. Auto industry is down, but Tesla is up.
Next gigafactory is just north of Austin, Texas (15 min from downtown Austin) on the Colorado river. "Boardwalk" and "ecological paradise." Cyber truck, Semi, and 3&y for eastern half of North America. Fremont will do S&X for worldwide and 3&Y for western half of NA. Shout out to Tulsa.
Tesla solar is the cheapest in the US. 30% cheaper than US average. $1.49/w.
New Tesla Model S has a range over 400 miles.
2:39: FSD crap
2:40: Thank you Tesla team again for a full year of profitability. 3 new factories within the next year. "So much to be excited about"!
"Never been more excited for the future of Tesla"
2:42: CFO
Saved costs by laying employees off
Continue reducing costs
$48M FSD recognized
Megapack is profitable
Questions from institutional investors:
Q: *missed the first question, sorry*
Q: Vision for the future
A: FSD on all vehicles. Biggest value increase of any company.
Q: AP. Upcoming self driving milestones
A: Major milestone is transition from "2.5D" (pictures) to "4D" (video) environment. Later this year. Big improvement to process video instead of pictures for FSD... Better than humans. "Orders of magnitude reliability" better. Elon thinks computers are smart.
Q: Alien Dreadnought
A: Putting more work into manufacturing engineering to make the machine that makes the machine. GF1 is alien dreadnought version 0.5. Working towards 1.0. GF Shanghai makes better cars than Fremont. Berlin Model Y will look the same but have more advanced architecture. Integrating design and manufacturing. Vertical integration is important. Increasing CapEx efficiency. "Tesla loves manufacturing!"
Q: How many can Tesla produce in Texas
A: "Right now, 0. Long term, a lot."
Retail:
Q: Tesla Energy
A: Long term Tesla Energy will be same size as Tesla Automotive. Solar, wind, and batteries. Grid scale storage will expand. Auto-bidder is autopilot for battery storage; Like high frequency trading. Makes sure the battery is working correctly and grid satisfied. Main thing about Tesla is cell production at an affordable price (Tesla doesn't manufacture cells though? - me). "Talk more about this at battery day."
Q: Tesla Semi production plans
A: Production will start next year. First few units will be used by Tesla. Mainly between Fremont and Reno/Sparks. Some early units will go to some early adopters. Semi will be awesome. Semi will use nickel based cells. Passenger vehicles will use iron based cells; range of maybe 300 miles in the Chinese market. Use very little cobalt in cells already.
Q: Why is Tesla removing the standard range vehicles
A: "Mining companies, please mine more nickel at high volume." Tesla will sign a long term contract. New normal for range will be ~300 miles.
Q: What is the hold up of Tesla insurance outside of California
A: "Joking before call about quarterly insurance question." "Version 0.9" in California. Use the data captured in the car to assess probability of crash and use that for premium. Take the California product and use it in other states or make other states better; going with the latter. Handful of states by the end of the year. Regulatory approval will be needed. Version 2, Version 3, etc. as they go forward. Car will let you know to "drive better if you want a lower premium." Elon: "#1 thing to take from this call is that Tesla is hiring ... especially insurance." Tesla insurance will be provided for Tesla Network car sharing; not required.
Investors on the line:
Q: Gross margin of vehicles different between factories.
A: GM increased in China. Model Y was profitable in first quarter of production. Model Y is more expensive than Model 3 to produce, but will become closer to the same. Locally sourcing components is "literally rising 5%-10% price improvement per month." Suppliers are eager to support Berlin GF.
Q: Is Tesla aiming for industry leading gross margin. EV credits
A: "We don't run the business to rely on regulatory credits." Revenue from FSD. OpEx continues to come down.
I have to go, so this is it for the call live blogging
submitted by gwoz8881 to RealTesla [link] [comments]

Leveraged ETFs aren't the best thing since sliced bread.

Recently I've seen a lot of discussion about how high leverage is the way to gain tons and tons of money and I'd like to push back against that a bit.
Firstly before we begin see here: https://imgur.com/a/e2XMgT7 . This is a graph of GUSH, a 2x levered crude oil ETF. I've left out 2020 since there have been weird happenings and I don't want to base my arguments on specific events (its lost over 90% of its value since the end of the graph) but you can still see the precipitous drop over the 4 years, going from 80k to just under 1k even though oil itself didn't make any drastic changes in its price over the time period in the graph (the scale on the graph is logarithmic). This alone should be enough to send alarm bells ringing, how is it possible this ETF lost nearly 99% of its value when Crude Oil hardly shifted over the 4 year period?
Yes, levered ETFs can be good to make a lot of money in a short period of time if you have reason to believe that a big market move is imminent, however they should absolutely not be held over long periods of time and unless you are active in the markets on a daily basis you should stay well clear of them.
Furthermore the graph above was for a 2x levered ETF, not like a 10x leverage like there was some discussion about recently. There is a reason you can't just just go and buy arbitrary leveraged stuff (and no it is not to do with margin requirement, but instead the regulators forbid this for good reasons).
Why is that the case? Lets do an example with Crude Oil. Suppose you have a Crude Oil 2x ETF with $1 billion in total assets and oil is trading at $100 a barrel.
To maintain your 2x leverage you need to borrow $1 billion and buy $2 billion of oil. Firstly you have to pay interest on what you borrowed, but that is tiny these days and we will ignore it.
Now you have $2 billion of oil, $1 billion of equity and $1 billion of debt. Suppose the next day oil goes up to $150 a barrel (a huge move, but bear with me). Now you have $3 billion of oil which corresponds to $2 billion of equity and $1 billion of debt.
So oil has gone up 50% and your equity has increased 100%, so far so good, the ETF is doing what it is supposed to be. However now there is a problem, you have $2 billion of equity but only $3 billion of oil and so you are no longer 2x leveraged (to see this note that if oil goes up 50% again the equity won't double).
To maintain your leverage you need to go off and borrow $1 billion more and buy more oil. Now you have $4 billion of oil and $2 billion each of equity and debt.
Now suppose the price of oil goes back to $100 a barrel the next day. Now you have $2.66 billion dollars of oil and still have $2 billion of debt. So you only have $0.66 billion dollars of equity left.
(Re leveraging properly will leave you with $1.22 billion dollars of oil and $0.66 billion dollars of debt).
Note that over the course of these two days the price of oil is net unchanged, it started 100 and ended 100, however your 2x leveraged ETF has lost 33% of its value while a 1x leveraged ETF would still be worth the same today as it was 2 days ago.
Obviously these changes are extreme but even the normal daily variance in oil price over a long period of time will destroy the value of this ETF through rebalancing, which is exactly what happened to GUSH, those 1% up 1% down days do really add up and so holding this ETF over a long period of time is just asking for your money to get destroyed since normal daily variance is a constant factor of how markets behave.
You can see the effects over just 4 years with your own eyes. So, as they say with everything else, but I would add specifically for leveraged ETFs: Caveat Emptor.
submitted by BurdensomeCount to slatestarcodex [link] [comments]

What trading on margin means and how to use it  The Dough ... Understanding Margin Rules and Requirements What is Margin Trading?  Fidelity - YouTube Day TradingHow to margin Buy Sell sharesSell shares ... 9 Tips for Trading on Margin

With a margin account you will be subject to the pattern day trading rule, which requires you to have a minimum of $25,000 in equity in your margin account if you place 4 day trades or more in a 5 day period. In this article, we will take a look at margin, what it is, what it does, and how it affects your day trading performance and day trading strategies like the gap and go strategy. Margin is both beneficial and detrimental, depending on how you use it. It's one of the most important aspects that traders must be aware of. Any margin customer who executes four or more day trades in a 5-business-day period. The number of day trades must comprise more than 6% of total trading activity for that same five-day period. Any margin customer who incurs two unmet day trade calls within a 90-day period. As I say day trading without margin aloud, it is almost as if I am taking all the fun and excitement out of trading. I would compare it to riding a supercharged Harley with a In this article we will cover 5 benefits of day trading without margin. Day Trading Rules (only in Margin Accounts) Day trading on margin refers to the practice of buying and selling the same stocks multiple times within the same trading day such that all positions are usually closed that trading day.Day trading using a cash account can easily lead to Good Faith Violations.. Learn more about Cash & Margin Account Day Trading Rules and Good Faith Violations.

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What trading on margin means and how to use it The Dough ...

From a trading or investing perspective how do we use it: 1) Know the interest rate - this depends on LIBOR (or the central bank's interest rate) and the broker you are trading with. That will ... Today we will cover the basics of margin for active traders. Using margin can be an amazing advantage but you should be aware of how it actually works to avo... Have you always wondered what it means to trade on margin? In this video, you’ll learn what margin trading is and if it is a strategy that could help you ach... Margin involves the borrowing of funds for higher leverage in your trading account and it is imperative that a trader understands the guidelines and calculations required to manage one’s account. What is margin trading? What is a margin? What is the difference between a cash account and a margin account? In episode #34 of Real World Finance we dive de...

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