Short-Term TSLA Price Movements - 2016

[Cosmacelf]

I am reminded of an excerpt from Ashlee Vance's biography of Elon, which says that while Elon was an intern with a major Canadian bank, he spotted an opportunity to buy foreign debt for about 25 cents on the dollar, which was backstopped by the US government for 50 cents on the dollar. It was a virtually guaranteed doubling of your money, backstopped by the US government. It didn't matter if you thought the foreign country would default, because unless you thought the US Gov would, you were still OK. He presented this to the bank, and they shot it down because of bad debts they'd encountered from those countries before. Bankers are a conservative type, but they're also mired in superstition and old habits. They are slow to adapt to changes. I expect their snubbing of SCTY bonds is pretty much that.

No doubt, but that is the danger. If large investors decide they don't want to invest in Tesla/Solarcity, it really doesn't matter that they are stupid, missing the deal of the century, etc. if the market declines to continue funding Tesla, there isn't anything Tesla or Elon Musk can do about it. Institutions with large amounts of cash ARE conservative. And white knights like Page have their money tied up in their own stocks and won't/can't sell large blocks of their own stock to fund Elon.

Yeah, i mean i brought up the point as something the 'Tesla has potential to go bankrupt and collapse' people totally miss. We have already seen strong evidence re: the leaking of google's offered acquisition of Tesla in 2013 before Musk walked away from it. Hence, the acquisition / worse case scenario floor under Tesla is probably a lot stronger than many/most assume.

At what price? If the stock price floor ends up being $50, that isn't going to comfort anyone here. I agree that the most likely danger scenario for the stock price isn't whether or not they close a financing round, but instead, how expensive will it be? If they finance at $150, that isn't going to make anyone here happy, and if they decide that $150 is too low, and decide to tighten their belt instead, that'll slow the growth of Tesla, and probably make the stock price decline to $150 anyways.

Time to stop posting on this for me, I'm not adding anything new. I actually am long term bullish on Tesla, but I won't likely get back in until investors start getting bullish about Model 3. And that'll be after the Solarcity acquisition (or not) and the next financing round.

 

[Mike Smith]

Given the value of Tesla's brand, products, technology, market position and team, I can't imagine what could go so wrong over the next few years (financially or otherwise) that would preclude someone like Apple or Samsung from wanting to buy Tesla for at least 30B if given the opportunity. If you believe that is true then Tesla has a very solid (except in the very short term) floor at $200 and unlimited upside.

The argument that the Solar City merger is a fundamental risk to Tesla is almost surely wrong. Elon knows more about both companies than anyone, and he wouldn't be doing this just to save Solar City if he thought there was any risk to Tesla - he'd just let it fail. It's one tenth the value of Tesla and the world doesn't desperately need another solar company. There's no way he'd risk poisoning Tesla, the company forging the path to sustainable transport. The product announcements over the next few months will reveal why he's so confident.

 

[MitchJi]

I've been thinking about the October numbers and Elon's email. I don't believe that Elon would say that if a big miss was possible. Aside from his ego the financial optics would be awful. I believe this means that there are two possibilities, that Elon is telling the truth, and it's close, but it could go either way, or it's a slam dunk and he wants the Tesla employees to maximize the positive impact.

Either way if we can reliably estimate the number of car deliveries required to be cash flow positive and non-gap profitable we can come up with a reliable minimum number for deliveries, plus or minus 250-400 cars. Of course it's possible that they could have some unexpected savings, but this information could be very valuable. I got a PM from someone who said he is in touch with quite a few long term forum members who don't post anymore and none of them believe that exceeding 21k is possible. But if we know that 24k (for example) is required to meet Elon's target then we can be confident that deliveries are going to be over 23k.

 

[Turing]

No doubt, but that is the danger. If large investors decide they don't want to invest in Tesla/Solarcity, it really doesn't matter that they are stupid, missing the deal of the century, etc. if the market declines to continue funding Tesla, there isn't anything Tesla or Elon Musk can do about it. Institutions with large amounts of cash ARE conservative. And white knights like Page have their money tied up in their own stocks and won't/can't sell large blocks of their own stock to fund Elon.

You know Page can simply acquire Tesla with google stock, like he offered to do in 2013 with a 11 billion dollar deal when Tesla was in far worse shape than it is today.

At what price? If the stock price floor ends up being $50, that isn't going to comfort anyone here.

See post #30945

 

[Cattledog]

They'll make it. He remembers where .01 got them in April 2013 - off to the races. He'll go work the line towards the end of September to rally the troops. Perhaps it's time for the TSLA faithful to do another pizza buy for the factory workers.

 

[FredTMC]

No one is "acquiring tesla" (IMO). Elon doesn't want that. Board doesn't want that. No change-in-control...

What we want as shareholders is a minority investment (like 5-10%)

This would likely be at an a premium to existing share price

 

[Turing]

No one is "acquiring tesla" (IMO). Elon doesn't want that. Board doesn't want that. No change-in-control...

What we want as shareholders is a minority investment (like 5-10%)

This would likely be at an a premium to existing share price

Agree 100%. My point again, is that a decently priced acquisition, likely by google or apple, is the worst case scenario at this point. Elon will do everything in his power to avoid that, but as an investor i think having that floor there that most people are ignoring isn't so bad.

It's like back when Tesla was struggling in 2013 and shorts were screaming that it was going bust any day now. It was true that Tesla was in a precarious position, it was false that there was any chance for Tesla to go bust as Musk simply called up Page and worked out a relatively awesome worst case scenario acquisition.

 

[Vitold]

[...]
At what price? If the stock price floor ends up being $50, that isn't going to comfort anyone here. I agree that the most likely danger scenario for the stock price isn't whether or not they close a financing round, but instead, how expensive will it be? If they finance at $150, that isn't going to make anyone here happy, and if they decide that $150 is too low, and decide to tighten their belt instead, that'll slow the growth of Tesla, and probably make the stock price decline to $150 anyways.

Time to stop posting on this for me, I'm not adding anything new. I actually am long term bullish on Tesla, but I won't likely get back in until investors start getting bullish about Model 3. And that'll be after the Solarcity acquisition (or not) and the next financing round.

I'm pretty certain this is the reason why stock is declining. Next support level is when bulls reload which should happen around $160. If TSLA will not retract this much this month I'll take it as a bullish sign..unless it's due to oil has skyrocketed.

 

[FredTMC]

Tesla seems to be following oil prices.


I'm pretty certain this is the reason why stock is declining. Next support level is when bulls reload which should happen around $160. If TSLA will not retract this much this month I'll take it as a bullish sign..unless it's due to oil has skyrocketed.

$160?! TSLA isn't going to $160...

We're 4 weeks away from Q3 delivery numbers.

 

[EnzoXYZ]

$160?! TSLA isn't going to $160...

We're 4 weeks away from Q3 delivery numbers.

Easy! Have you not been a long time TSLA investor?0

 

[Cattledog]

Easy! Have you not been a long time TSLA investor?0

Pretty sure he has, joined TMC 4 years ago and has 2700 posts. You?

 

[Drivin]

Tesla will absolutely get rid of the Solar City salespeople making 30% commissions.

The first point of sale contact will be in a Tesla store and a rough estimate can be given using google maps.

By the time an actual person visits a house this will be a very warm sales call on the cusp of consummation. This isn't a 3 hr hard sales pitch starting with giving basic information.

The Tesla brand will keep the Buffalo GF humming not cold calls and hard pitch salespeople.

Why don't they do all this today?
They could have done this with setting up a table in Home Depot or Lowes or even at Tesla.

The reason is that Solar is still a hard sell in an undifferentiated market and all that requires paying high commissions. Nothing about the Tesla acquisition/bailout changes that fundamental fact.

Walk in traffic to the Tesla stores are about the excitement of buying a car - one that goes really fast and has a lot of innovative gadgets, and oh, and you can also save the environment. Compare that with the sheer excitement of putting panels on your roof to lower you electricity bill. "Meh, we can do that later...now let me check out the frunk!"

 

[neroden]

No doubt, but that is the danger. If large investors decide they don't want to invest in Tesla/Solarcity, it really doesn't matter that they are stupid, missing the deal of the century, etc. if the market declines to continue funding Tesla, there isn't anything Tesla or Elon Musk can do about it. Institutions with large amounts of cash ARE conservative. And white knights like Page have their money tied up in their own stocks and won't/can't sell large blocks of their own stock to fund Elon.

You underestimate Brin's and Page's liquidity. They absolutely could sell blocks of Alphabet Class C non-voting stock any time they want to. Suppose Tesla needs $2 billion. That's about 2.5 million shares of Class C. Page and Brin each own about 20 million class C, and that isn't even the stock with voting rights.

Yes, I would much prefer it if Musk didn't have to resort to a private placement with Brin and Page, because they'd probably strike a hard bargain and it would be bad for other investors like us. But you know from what Brin and Page have said that they would bail Tesla out if the alternative was that Tesla ran out of cash -- and they certainly can afford it.

 

[EnzoXYZ]

Easy! Have you not been a long time TSLA investor?0

Pretty sure he has, joined TMC 4 years ago and has 2700 posts. You?

Exactly! Tesla at anytime can move +/- 50 easy in the short run. Can't underestimate that.

 

[neroden]

Question: If my SolarCity stock is down, am I able to realize the loss without triggering the wash sale rule if I've bought and or sold Tesla stock within 30 days of when the conversion takes place?

This is not tax advice. From what I can tell, as soon as the merger becomes absolutely 100% certain, the two stocks probably become "substantially identical". As long as there is real doubt about whether or not the merger will happen, the stocks are probably not "substantially identical".

 

[neroden]

Tesla will absolutely get rid of the Solar City salespeople making 30% commissions.

The first point of sale contact will be in a Tesla store and a rough estimate can be given using google maps.

Betcha they will use Project Sunroof for the areas where it's currently implemented. (It's totally nonfunctional in my area.)

 

[TrendTrader007]

I did not mean to suggest that I saw that outcome as being likely at all. Quite the opposite in fact. I'm long both TSLA and SCTY, and so I certainly hope such an outcome doesn't happen. Additionally, I drove a 1st gen Honda Insight for several years, and would buy a BEV if there was one available that met my needs on range and price (hence my Model 3 reservation within seconds of online reservations opening, before the unveil). I certainly am a believer in EVs and foresee rough times ahead for the automakers that don't adapt quickly. I just meant that I cannot see any possible outcome before that which doesn't simply result in one investor or another dumping even more cash into TSLA. After Model 3, I see one *exceedingly unlikely* possibility, *if* somehow demand for high-performance long-range EVs made by Tesla evaporates.

I believe that Model 3 represents a repeating of history from the Model T of 110 years ago. Ford created a whole new way of doing business in the auto industry, and for 110 years, basically everyone else has been using the same formula he pioneered. With the efficiencies created by Alien Dreadnought very possibly mirroring the sorts of achievements Ford made with the moving assembly line 110 years ago, and the Model 3 bringing a long-range high-performance EV to the masses at a price average people can afford, mirroring the affordability of the Model T and the way it mobilized America 110 years ago, there are a lot of undeniable parallels.

In 1903, the Ford Motor Company had 12 investors owning a total of 1000 shares with a Market cap of $28,000.
In 1919, Henry Ford, Edsel, and Clara bought out the other investors in a leveraged buyout for a total of $108M (about $80M of which was borrowed). I can't find a record of how many shares the Ford family retained control of in the intervening period, but even if you assume they bought all 1000 shares in 1919 for $108M, that represents $108,000 per share, based on an initial value of $28 per share, a nearly 4000x increase.

If I'm right and Tesla is similarly successful? Elon's estimate of a $1T market cap will look conservative.

i totally agree with your comparison to Ford Model T
i also believe that TSLA has the potential to be a 20 to 30 bagger over the next decade or so from current levels

 

[TrendTrader007]

I'm pretty certain this is the reason why stock is declining. Next support level is when bulls reload which should happen around $160. If TSLA will not retract this much this month I'll take it as a bullish sign..unless it's due to oil has skyrocketed.

no TSLA is not going to $160
for several reasons mostly fundamental
but also technical
weekly chart shows a triple bottom in place with higher lows
we go higher from here
by the time TSLA needs to raise capital in q 4 this stock will probably be much much higher than it is today
so i am not worried about shareholder dilution too much

 

[Vitold]

Why don't they do all this today?
They could have done this with setting up a table in Home Depot or Lowes or even at Tesla.

The reason is that Solar is still a hard sell in an undifferentiated market and all that requires paying high commissions. Nothing about the Tesla acquisition/bailout changes that fundamental fact.

Walk in traffic to the Tesla stores are about the excitement of buying a car - one that goes really fast and has a lot of innovative gadgets, and oh, and you can also save the environment. Compare that with the sheer excitement of putting panels on your roof to lower you electricity bill. "Meh, we can do that later...now let me check out the frunk!"

At this point SolarCity operations are no longer dialed for growth (in effect they are shrinking their business model by not expanding). I would expect them dropping out of some states soon. In the long run sales and marketing will be optimized around Buffalo Gigafactory output (not counting commercial installs that may continue with Chinese panels).

 

[neroden]

Tesla can not possibly provide store sales in the short term to replace solarcity's 1/3 U.S. market share. Solarcity has a very large inside and outside sales force that feeds that volume. Tesla has 50-60 U.S. stores.

I started counting. Outside California, SolarCity doesn't have very many stores.... and they're weirdly concentrated.

Arizona: 9 -- 3 in Phoenix plus Glendale and Mesa!
California: 32. Good geographic distribution, but 2 in Riverside?!?
Colorado: 2
Connecticut: 2
Delaware: 2
DC: 1
Hawaii: 2
Maryland: 5 (OK, that's quite a lot)
Massachusetts: 7 (again, that is quite a few)
Nevada: 1 (now service only)
New Hampshire: 1
New Jersey: 4
New Mexico: 1
New York: 4
Oregon: 1
Pennsylvania: 1
Rhode Island: 0, served from neighboring states
Texas: 3
Utah: 1
Vermont: 1
Washington: 0, served from neighboring states
----
Total: 80, of which 32 are in California



I would expect a lot of SolarCity stores to close because they have redundant locations with Tesla operations. (The Pennsylvania location is the most obvious.) A number of others are in locations where Tesla needed to open stores and service centers anyway. I would expect closure of the redundant locations in Phoenix.