Short-Term TSLA Price Movements - 2016

[myusername]

It is interesting that you cite execution risk and valuation as the two reasons for your short thesis on TSLA. If Tesla makes GAAP profit and/or does large deliveries in Q3, would you reconsider your position? What are your expectations for Q3, as in # of deliveries, cash flow, GAAP and non-GAAP profit?

I think GAAP profit is highly improbable due to incentives around shorter term leases, reduction in prices overall and the introduction of the 60s... I expect they will have negative GAAP and non-GAAP... and with this the expectation of delivery numbers is very high as some on this board are expecting 25k to 30k... what happened in Q2 was in my opinion eye opening... analyst projections of 18k to 20k and they delivered 14.5k. yes, there were thousands in the queue... but that's just how it goes. the number was 14.5k... based on quarterly history, I think they are going to miss expectations... which are high. i expect they will break their quarterly record... but i am considering that they may not break 20k.

regarding cash flow/etc... quite honestly i'm not focusing on that... it doesn't appear to be a factor in the PPS... if they exceed delivery expectations then they will negate any cash flow issues with capital raises (which are also a negative but result in positive stock reaction). it seems that's expected and factored in.

what's not factored in i believe is another dramatic miss. if the numbers come in around 18k to 19k... then what should we expect the stock's reaction to be?

and then stepping back and looking at Tesla as an Auto company relative to the rest... it will take many quarters of success for me to go long.

so... to answer your question... would I reconsider my position if Tesla achieved GAAP profitability in Q3?... the answer is yes... I would reverse my position very short term to be weighted long and if that succeeded I would take profits and sit on the sidelines for the next quarter as that would effectively question my opinion that Tesla is not capable of sustained operation without frequent and heavy dilution.

 

[ev-enthusiast]

Tesla settles court case with supplier over the development of the Model X’s Falcon Wing doors

 

[racer26]

The general public most certainly has the right to restrict what companies and individuals do.

If we'd stopped Al Sloan and Kettering from pushing tetraethyl lead in gasoline, we would have stopped some of the worst horrors this world has ever known.

I certainly hope Elon Musk understands that he doesn't have the right to unilaterally go nuke Mars to "improve the climate" (something he suggested when asked about outrageous ideas which might be good ideas). I would expect him to get permission from the UN.

Specifically wrt Space, Mars, Elon and SpaceX are limited. There are already existing international treaties about what can and cannot be done in space, and in order to even get there, SpaceX first has to get extensive FAA, FCC, and other clearances to even fly at all.

At some point though, those treaties will have to be rethought - they state that nobody owns anything out there, that it is the property of all of us. How then, do you divvy up land on Mars in some future terraformed Mars scenario? At some point somebody has to decide who gets to use it for what.

 

[myusername]

I'm going to be brutally honest here: expect the same amount of consideration that you'd get at a Honda forum or NASIOC, which is exactly zero. Car forums are extremely tribal, and cars, particularly those with high horsepower and/or high price tag, are a proxy for power and prestige.

The fact of the matter is that nobody knows what exactly will happen to TSLA, and anyone who claims to do so is either delusional, a liar, or both. That goes for people who both proclaim that Tesla will rule the world, and those who say the company is doomed for sure. The Bull thesis is that Elon Musk and his team are smart enough to make Tesla profitable through a combination of high-margin cars, stationary battery storage, and solar generation. The Bear thesis is that they can't do it.

I see Elon Musk as a "once in a generation" entrepreneur, the kind of guy who is willing to risk it all, even when he doesn't have to, in order to bring radically different products to market. He has tremendous energy, sees the world differently than most people, and can be a real bastard a lot of the time. In the last 20 years, the only other person I've seen with this level of drive, and capacity to elicit division and worship/hate from the public, is Steve Jobs. Jobs' efforts ultimately pushed AAPL well above 500B in market cap, despite the company having been nearly dead by the mid-90's. If anyone could do the same, it would be Elon Musk. So I'm willing to risk a small investment in TSLA for a potentially huge payoff, and my shares will sit in my brokerage account until either the company succeeds wildly or the shares are worth $0. I do not invest any of my 401k or IRA funds in TSLA, so my future solvency is not dependent on the stock. This is my 100% unfiltered opinion.

this is a very insightful post... and I see this as noble. i decided long ago to try to not trade on emotion... just as the institutions that hold the majority of this stock are. specifically... i can't quantify Elon as a factor of success... while quite frankly... deep down I hope this whole plan succeeds... but my quantitative self just can't see it. regardless, I have nothing negative to say about your position. best of luck.

 

[Ulmo]

Specifically wrt Space, Mars, Elon and SpaceX are limited. There are already existing international treaties about what can and cannot be done in space, and in order to even get there, SpaceX first has to get extensive FAA, FCC, and other clearances to even fly at all.

At some point though, those treaties will have to be rethought - they state that nobody owns anything out there, that it is the property of all of us. How then, do you divvy up land on Mars in some future terraformed Mars scenario? At some point somebody has to decide who gets to use it for what.

(No ownership, property of all of us? That's very communist. I wonder who wrote it and campaigned for it? USA probably signed it just to appease the Chinese for some money, and never intend to follow through on it.)

Yes, of course. The first person who stands their ground up on Mars will make that treaty obsolete. And the millionth person who stands their ground up on Mars will make Earth's influence a tiny fraction of what it was previously (extrapolating from today's estimate at the conference). Those who want to block the future of the human species will try to stop propagating humans to Mars, but the human species will fight back and go anyway. I believe that Elon Musk and SpaceX will get the permission they need, but you will see the typical amount of mudraking in the news and from religious types before and during that process. If you thought the B.S. flung at Tesla was a deluge, just you wait until survival of the Human Species becomes a topic -- the amount of vitriol against Human Species will surprise all of us, guaranteed, and Elon Musk and all of his companies and supporters will become fair game for the "humans are evil" crowd, of which There Are Many.

I'm glad the launch pads will be in Florida and Texas, known for their ability to repel a large number of anti-human-species agitators.

Also, as I identified, it seems that the whole "communist vs. everyone else" thing is an issue, and there will be international disagreements. We already saw some of that at today's conference, and I think some of today's Q&A showed some of the angling for that propaganda machine already. Elon letting the propagandists share shoulders with Burning Man attendees was a deft move to let everyone see what the quality level of people are that are making the anti-survival case, so that the rest of us will brush the anti-human concerns aside and let SpaceX do its thing.

Edit: I'm rewatching today's presentation. Notice how the Mexico crowd did not understand the necessity of multiplanitary survival. Elon and those who think like him understand this. But the majority attitude of the conference attendees did not understand that (even though a few among the crowd had at least contemplated the concepts, and perhaps a few of the crowd agreed and understood). Elon even had to ask them FOUR TIMES what their thought on this was, and finally when prompted, they cheered, and only then. Our species understands survival, but our mob populace international activist crowd is not among that group.

For now, I'm glad SpaceX is not part of Tesla. I think that will be a rather permanent separation. They both save the species, but in different ways.

 

[Intl Professor]

At some point though, those treaties will have to be rethought - they state that nobody owns anything out there, that it is the property of all of us. How then, do you divvy up land on Mars in some future terraformed Mars scenario? At some point somebody has to decide who gets to use it for what.

There is a substantial body of international law concerning boundary settlements on Earth which might provide precedent. Unfortunately there is always the problem of enforcement unless the settlement is long established and everyone agrees with it. The rebuilding of islands in the South Pacific by China, over the objections of Japan, the Philippines, and Vietnam showcase the problem. The sooner a comprehensive treaty over space is concluded the better since time will make competition more severe and agreement less likely. Unfortunately very few governments are proactive.

 

[anticitizen13.7]

specifically... i can't quantify Elon as a factor of success...

This is true. A person can't be reduced to a number, but I think the person does matter.

Look at Apple's product trajectory post Steve Jobs. I've taken a lot of flak here for saying it, but in the 5 years since Jobs died, Apple's hardware designs have had less conviction, less cohesion, and in some cases have gotten stale. OS X and iOS have become increasingly kludgy and bug-ridden. Apple is still riding high, thanks to the fact that Google has messed up Android so completely due to their overeager-ness to get Android into as many handsets as possible (making it a security disaster as well as making the OS pedestrian and harder to differentiate)... but the fact that Apple won't release iPhone 7 initial sales results is not a good indicator, considering the slowdown in 6s sales.

Elon is likely the reason Tesla survived the Roadster era. Martin Eberhard is a brilliant engineer like Steve Wozniak back in the day, but it takes vision as well as engineering genius to bring a product to market. Like Woz, Eberhard faded away from the company he founded, though with a ton of $$$ from company stock. Elon Musk is pivotal to Tesla. He's not perfect. He does crazy things. But somehow he makes Tesla work.

 

[myusername]

This is true. A person can't be reduced to a number, but I think the person does matter.

Look at Apple's product trajectory post Steve Jobs. I've taken a lot of flak here for saying it, but in the 5 years since Jobs died, Apple's hardware designs have had less conviction, less cohesion, and in some cases have gotten stale. OS X and iOS have become increasingly kludgy and bug-ridden. Apple is still riding high, thanks to the fact that Google has messed up Android so completely due to their overeager-ness to get Android into as many handsets as possible (making it a security disaster as well as making the OS pedestrian and harder to differentiate)... but the fact that Apple won't release iPhone 7 initial sales results is not a good indicator, considering the slowdown in 6s sales.

Elon is likely the reason Tesla survived the Roadster era. Martin Eberhard is a brilliant engineer like Steve Wozniak back in the day, but it takes vision as well as engineering genius to bring a product to market. Like Woz, Eberhard faded away from the company he founded, though with a ton of $$$ from company stock. Elon Musk is pivotal to Tesla. He's not perfect. He does crazy things. But somehow he makes Tesla work.

agreed... in that "it takes vision as well as engineering genius to bring a product to market"... but when looking back on the history of Jobs... at what point in time did the masses (us) herald him as a successful visionary?... Jobs was fired. he did great work with Pixar... and then came back to Apple... introduced the IPod... and it wasn't until then was he on our radar... it seems like the market is continuously trying to find the next "Jobs"... for a second there Nick Woodman was the next Jobs... there's been a dozen others that were the next Jobs... but truthfully... I do not think we will find the next Jobs until someone actually takes a company and turns it into the next Apple...

yes... Elon's reputation and sway may have had influence on the continuation of the company... but it is far from the success of the likes of the IPod or IPhone... so doesn't that mean we are proactively expecting Elon to be the next Jobs?... and considering the hundreds to thousands that could have been the next Jobs but weren't... shouldn't we take this with a grain of salt?

I simply can't put my money into a company based on the idea that there's a person that might be revered as the next Jobs in 5 to 10 years... rather I see this as the catalyst for unrealistic expectations.

 

[3Victoria]

I do not think that Elon does crazy things. His thoughts and actions are quite rational and well thought out. He does make some playful comments at times but this is only an indication of an active and intelligent mind. The whole SpaceX system he described was well thought out. Some of the finer strokes may need modification, but the over all flow/ideas are well done. One has to accept the basic premise, though, to get it. Similarly, Tesla Auto and Energy make sense if you accept the premise and are willing to see it though.

 

[myusername]

I do not think that Elon does crazy things. His thoughts and actions are quite rational and well thought out. He does make some playful comments at times but this is only an indication of an active and intelligent mind. The whole SpaceX system he described was well thought out. Some of the finer strokes may need modification, but the over all flow/ideas are well done. One has to accept the basic premise, though, to get it. Similarly, Tesla Auto and Energy make sense if you accept the premise and are willing to see it though.

I agree... and your candor is significant... I do not question Elon's intellect... but at the same time I do not see it as greater than ours. Too frequently he is labeled a "genius"... nobody should want such a label... which is an attempt to segregate him from the "masses" and is used as a reason to invest. He is human and is as fallible as we are... and we should question him as much as we question ourselves. I only state that I can't quantify a person (Elon) into a valuation for this reason. I haven't commented much on the SCTY endeavor... but honestly... this is the one case where I question Elon's credibility... there are too many lines that lead back to him and his family that are terribly difficult to justify in this acquisition. I do understand the path that's been laid out between Tesla Auto/Energy and SCTY... but there are completely rational questions around the combination of what I see as financially questionable companies at this time.

 

[EinSV]

If I may make a suggestion as this OT (off-topic) discussion goes OT (overtime), there is a thread devoted to Elon's speech today over here: Elon speaking on 09-27-2016 at the IAS.

 

[Krugerrand]

I certainly hope Elon Musk understands that he doesn't have the right to unilaterally go nuke Mars to "improve the climate" (something he suggested when asked about outrageous ideas which might be good ideas). I would expect him to get permission from the UN.

If you watch the video of his recent Mars talk, it's quite clear what his intentions are. None of them are nefarious. None of them are to be King Elon of Mars. None of them are to decide what happens on the planet or even deciding who should or should not go.

 

[Krugerrand]

who challenges Elon? who vets Elon's decisions? one might say the shareholders... but are shareholders interested if the advent of electric cars greatly accelerates the extraction of natural gas to feed an electrical grid to compensate for a dramatic change?... they are not.

what are the ancillary effects of converting all ICE vehicles to EV?... where's the research on this question?... are we just assuming it's all positive?... or have we done scientific research to prove so?

Actually, the answers to all your questions already exist in painstaking detail. All you have to do is a little, wait for it.....

....research.

 

[anticitizen13.7]

yes... Elon's reputation and sway may have had influence on the continuation of the company... but it is far from the success of the likes of the IPod or IPhone... so doesn't that mean we are proactively expecting Elon to be the next Jobs?... and considering the hundreds to thousands that could have been the next Jobs but weren't... shouldn't we take this with a grain of salt?

I simply can't put my money into a company based on the idea that there's a person that might be revered as the next Jobs in 5 to 10 years... rather I see this as the catalyst for unrealistic expectations.

Think back to the first iPhone. It was not really a success. It sold in relatively low numbers, and had many technical limitations, including slow EDGE cellular data, a really lousy email client, and lack of cut/paste functionality. However, the first iPhone was an indicator of where things were going, in terms of touch interface and mobile networks. In the same way, Tesla's vehicles are limited and even rough in some ways (particularly interior conveniences), but with each iteration they get better and better.

One should absolutely take any comparison to Jobs with a grain of salt. Obviously, there is no guarantee that Elon will succeed, and that is why I constantly tell people here not to risk money on TSLA that they cannot afford to lose. Again, to be brutally honest, any investment in TSLA is essentially a gamble. There are any number of things that can go wrong, and shareholders have effectively zero control at the retail level over how the company is run.

Everyone who buys shares in TSLA should consider the real possibility that those shares could fall to $0.

I do not think that Elon does crazy things. His thoughts and actions are quite rational and well thought out. He does make some playful comments at times but this is only an indication of an active and intelligent mind. The whole SpaceX system he described was well thought out. Some of the finer strokes may need modification, but the over all flow/ideas are well done. One has to accept the basic premise, though, to get it. Similarly, Tesla Auto and Energy make sense if you accept the premise and are willing to see it though.

I remember some people got really upset when he went walking on the wing of a flying airplane a year or 2 ago. And the design choices for Model X were imprudently risky. Elon even admitted that it was overly ambitious. He's on record as saying that starting a car company was idiotic, given the failure rate, and that starting an electric car company was even more idiotic!

He's crazy by most people's standards. The vast majority of the people I talk to in real life, who aren't familiar with Tesla or SpaceX, are in complete disbelief when I try to explain his businesses. They don't understand why he would spend his entire fortune on rockets and electric cars.

If he weren't crazy, I probably wouldn't have invested in TSLA in the first place. It's a double edged sword. The crazyness opens up the mind to the possibility to revolutionary and better products and services. However, it can also lead to questionable decisions that defy rationality.

 

[myusername]

Actually, the answers to all your questions already exist in painstaking detail. All you have to do is a little, wait for it.....

....research.

I'll refrain from directly responding to this or other points to avoid propagation of the OT subject... but thanks for the discussion.

 

[GoTslaGo]

I'll refrain from directly responding to this or other points to avoid propagation of the OT subject... but thanks for the discussion.

Thank you for a civil discussion. So many others descended into name calling and worse.

I hope you don't mind if I ask you a specific question about shorting. When you short TSLA, the broker requires that you pay interest (presumably removing the daily interest from your margin account). Is that interest locked for as long as you hold your short position, or does it change depending upon the daily rate changes?

Thanks again!

 

[FluxCap]

Why It’s a Good Time to Play the Tesla-SolarCity Merger

Ben Kallo is a smart cookie.

So HRC made it abundantly clear last night that our TSLA / SCTY / renewables portfolios stand to gain somewhere between decently to massively in her administration. The market liked this today and TSLA and SCTY were going along for the ride before the engineered short attack mid-morning, but that will not work in the coming weeks / months, and it will certainly not work next year, so they are spending all the ammo they have now. It's an interesting time for TSLA - the time to profit from the SCTY arbitrage is closing fast as that share price will inevitably move to the $25 offer price within the next week or so, and the time to make money shorting TSLA will inevitably be over once it becomes clear that SCTY will not only merge successfully but add significant value to the company, HRC will win, Q3 might have upside surprise, and markets stabilize further.

Money to be made here for the swift and bold.

Holding TSLA through next year seems like a 2013-level win in the making as long as HRC wins the US election. Perhaps sad to say it comes down to something so simple, but I think it does. So if shorts keep spending massive amounts of money to artificially shove TSLA down a bit, I'll keep loading up.

Holding / buying more SCTY in the nearer-term seems like it will keep making me money, so that's what I intend to do.

 

[TMSE]

I think GAAP profit is highly improbable due to incentives around shorter term leases, reduction in prices overall and the introduction of the 60s... I expect they will have negative GAAP and non-GAAP... and with this the expectation of delivery numbers is very high as some on this board are expecting 25k to 30k... what happened in Q2 was in my opinion eye opening... analyst projections of 18k to 20k and they delivered 14.5k. yes, there were thousands in the queue... but that's just how it goes. the number was 14.5k... based on quarterly history, I think they are going to miss expectations... which are high. i expect they will break their quarterly record... but i am considering that they may not break 20k.

regarding cash flow/etc... quite honestly i'm not focusing on that... it doesn't appear to be a factor in the PPS... if they exceed delivery expectations then they will negate any cash flow issues with capital raises (which are also a negative but result in positive stock reaction). it seems that's expected and factored in.

what's not factored in i believe is another dramatic miss. if the numbers come in around 18k to 19k... then what should we expect the stock's reaction to be?

and then stepping back and looking at Tesla as an Auto company relative to the rest... it will take many quarters of success for me to go long.

so... to answer your question... would I reconsider my position if Tesla achieved GAAP profitability in Q3?... the answer is yes... I would reverse my position very short term to be weighted long and if that succeeded I would take profits and sit on the sidelines for the next quarter as that would effectively question my opinion that Tesla is not capable of sustained operation without frequent and heavy dilution.

Nice to hear that you are willing to change your position if Tesla reports GAAP profit for Q3.

You must have read Elon's letter to his employees few weeks ago. There was a reference to Tesla being close to GAAP profitability. You don't seem to believe that. Do you think Elon is mistaken or simply lying?

 

[myusername]

Thank you for a civil discussion. So many others descended into name calling and worse.

I hope you don't mind if I ask you a specific question about shorting. When you short TSLA, the broker requires that you pay interest (presumably removing the daily interest from your margin account). Is that interest locked for as long as you hold your short position, or does it change depending upon the daily rate changes?

Thanks again!

i'm short with options not stock... so my interest is the time factor... but short seller's interest is based on daily fluctuations... not locked in.

 

[myusername]

Nice to hear that you are willing to change your position if Tesla reports GAAP profit for Q3.

You must have read Elon's letter to his employees few weeks ago. There was a reference to Tesla being close to GAAP profitability. You don't seem to believe that. Do you think Elon is mistaken or simply lying?

"Do you think Elon is mistaken or simply lying?"

I can only say that I believe there's no way Elon believed the email would have not been made public... with that... if I sat down with him for a game of chess I would not let my guard down.