Short-Term TSLA Price Movements - 2016

[aznt1217]

Oh the demand argument...again lol

 

[brian45011]

i decided long ago to try to not trade on emotion... just as the institutions that hold the majority of this stock are. .

Several institutions hold large percentages of the shares outstanding in both TSLA and SCTY. What do anticipate they will do when the SCTY shares are exchanged for TSLA shares?

 

[MitchJi]

Tesla’s Short Squeeze Unwinds as Borrowing Costs Fall

Tesla Motors investors are learning that what goes up can also come down.

Shares of the company fell 1.5% on Tuesday during a session when the S&P 500 gained 0.6%. That’s a sharp bounce after a 6.4% rise in the stock between Sept. 14 and Monday, outpacing the benchmark’s gain by 5.5 percentage points.

Investors and analysts attributed the reversal in part to the easing of an unusual short squeeze this month that started when brokers began recalling the shares they had lent out for shorting purposes. Owners must have their stock in hand on the “record date” in order to vote on a controversial merger between Tesla and SolarCity, leading many to take back their shares to ensure they can vote.

[RELATED: Tesla’s Short Sellers Are Paying Through the Nose]

In such a circumstance, investors can be forced to close out their positions by buying shares, which drives the stock price up. But once the record date passes, holders may start lending again, allowing short sales to ramp up again.

A record date hasn’t been publicly announced for the merger vote, but disclosures and materials on Tesla’s website suggested the record date was set to be sometime last week. A spokeswoman for Tesla directed us to the recent disclosures.

The annualized cost of borrowing shares to bet against them had climbed to as high as 120% of the share price for new positions last week, but on Tuesday afternoon was back between 20% and 30%, according to Ihor Dusaniwsky, head of research at S3 Partners. That’s still above the average of about 14% since the merger was first proposed in June, but down substantially from last week.

The cost to borrow for existing short positions remained little changed, at between 20% and 25% on Tuesday, though it was expected to start falling, Mr. Dusaniwsky said.

David Rocker, a former hedge fund manager who is personally short the stock, said he was forced to reduce his short position when brokers recalled their shares. As stocks were lent out again, he reestablished his position.

“The recent rise in the stock has been caused because of an artificial reason,” he said. “Now that it has been removed, the stock can trade on its own merits again.”

Tesla’s stock has been a popular target among short-sellers, particularly as the shares have climbed over 600% in the last four years. Some, including noted short-seller James Chanos, have railed against the proposed merger with SolarCity, saying that the combined firm would burn large amounts of cash.

Not today (so far).

 

[Lessmog]

Tesla’s Short Squeeze Unwinds as Borrowing Costs Fall

Not today (so far).

As we here know, the wsj blog is incorrect in that the RECORD date for the merger vote is known (officially? at least stated by IR chief Jeff R) to have been last Friday. As to when the ACTUAL vote will be, that's an altogether different story and not directly relevant to shorting, I venture to guess.

 

[NOLA_Mike]

Baird pounding the table again:

MarketBeatCom on Twitter

 

[Oil4AsphaultOnly]

Several institutions hold large percentages of the shares outstanding in both TSLA and SCTY. What do anticipate they will do when the SCTY shares are exchanged for TSLA shares?

Nothing, as their percentage ownership of the resultant company would essentially be the same (e.g. 10% of TSLA, and 15% of SCTY would avg out to ~10.5% of TSLA), and their absolute dollar amount invested in Elon Musk would still be exactly the same as well.

"Fearing" that they'd sell to reduce their holdings in any one company isn't the same as understanding their reasons for selling.

 

[Oil4AsphaultOnly]

Tesla (TSLA) Checks Show Solid Model X Orders, Aggressive Model S Discounting - Pacific Crest

Pacific Crest analyst Brad Erickson expects Tesla's (NASDAQ: TSLA) Q3 Model X deliveries to be solid, and he thinks this may provide some reprieve for the bulls. However, he also thinks the declining quality for Model S demand poses ASP and margin risk and calls longer-term demand into question. Overall, he remains cautious.

Erickson explained, "Based on conversations with 20 Tesla sales centers around the United States, we expect deliveries to be relatively in line with our estimate of 22,000 deliveries, or 90% y/y growth. Based on our checks, we think Model X deliveries could actually be a bit above our forecast of 9,000 while we expect Model S deliveries to be more in line with to slightly below our estimate of 13,000."

The analyst continued, "While we think Tesla is tracking to the low end of its previously stated delivery target of 80,000-90,000 for 2016, it is using various discounting mechanisms to do so, which is cause for worry. First, we found continued traction of the $9,000-cheaper 60 kWh Model S versus the 75 kWh option, which is dilutive to gross margin by an estimated 1000 basis points. Second, we think as many as a third of current Model S orders are coming from Model 3 reservation holders opting for the newly created two-year (and less expensive) lease. Finally, we found Tesla has been employing a deeper discounting formula to drive sales of inventory models, with all offers expiring this Friday, the last day of the quarter."

Erickson concluded, "While we believe the SolarCity (SCTY) merger will ultimately get done, we think the car business, which should account for more than 90% of revenue if the SCTY deal goes through, has several hurdles yet to clear, namely how it will bridge demand all the way to Model 3 late next year. Bulls could be optimistic about strong deliveries (which we expect); however, Tesla's clear tactics to improve optics in the face of slowing demand would likely outweigh positive deliveries and as a result keep us cautious on TSLA."

Pacific Crest reiterated a Sector Weight rating on Tesla Motors.

I think Mr. Erickson failed to see that the 1/3 of model 3 reservation holders who leased the model S, didn't exactly give up their model 3 reservations. A 2-year lease just puts them right in time to order and pick up their model 3's.

What to do with the leases after they're returned? the CPO program seemed to be pretty successful at getting people into a BEV and NOT purchasing an ICE in the process.

 

[esk8mw]

I think Mr. Erickson failed to see that the 1/3 of model 3 reservation holders who leased the model S, didn't exactly give up their model 3 reservations. A 2-year lease just puts them right in time to order and pick up their model 3's.

What to do with the leases after they're returned? the CPO program seemed to be pretty successful at getting people into a BEV and NOT purchasing an ICE in the process.

Exactly. That's what outsiders just don't understand. Much like Apple, once you are in the Tesla ecosystem you don't want to leave. I just took delivery on a 2 year S lease (after selling my 2015 S90D) and I'm a Model 3 reservation holder. I'm definitely not giving up my reservation. On the contrary, my lease should transition me nicely into the Model 3, my lease will be sold to a CPO buyer who is likely new to Tesla and gets yet another person hooked on Tesla. The more Teslas on the road (really by whatever means necessary), the faster the company and EV concept is accepted. There's no competition and Tesla is building a huge lead.

I just realized I've been upgrading cars at a faster rate than I upgrade my phones. Well done, Elon.

 

[winfield100]

what it is when amazing team comes together - it's unstoppable. Well, I think that's Tesla team now, and that gives me confidence to keep my money there.

as additional example, look at any of the videos of the SpaceX launches and the hundreds of amazing kids in the background
"Out of the cradle, endlessly orbiting"

 

[TrendTrader007]

You are quickly earning the title of Cheif hater in this thread.

Also what you said is pure rubbish. Ironically it's pretty similar to how incumbent auto companies used to soak about Tesla. Assuming the old and extremely inefficient ways of doing things are the best, or even remotely good when better ways present themselves.

I agree. There is no scarcity of naysayers who themselves amount to precious nothing in their little uneventful, nondescript life and are total underachievers of the highest order yet quick to throw stones at extreme superachievwrs like Elon. I guess these losers define their pathetic existence by how much they can attempt to malign the overachievers

 

[techmaven]

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.

Actually, I think you are trading on emotion and very little on quantitive measures. The market takes many things into consideration when deciding on valuation. By all traditional accounts, AAPL should not have had such a low P/E for so long, even as the stock was in its tear. The P/E was still on the very low side. Similarly, many people had pegged AMZN's valuation at far, far lower. The biggest problem with some of the data I saw you present is that your analysis overweights past financial performance with what is going to happen in the future. A few disappointments, including the big Model X launch problems are overweighted in your evaluation. Even your posting about deliveries demonstrates that you really have not spent the time that @bonaire and @schonelucht which are our resident "keep it real" commentators have spent in their VIN counting and financial models. In essence, you are saying that the market has it wrong in the same way the bulls say that the market has it wrong. And you haven't really presented any quantitative evidence that demonstrates that our view of TSLA is incorrect. In other words, the market is willing to give TSLA a big premium. Thus far, I've only seen that you think that TSLA doesn't deserve that premium. I'm saying that the premium is based on a conglomeration of views upon the business, and materially relevant information that alters our view on the business will move the stock. We are the beginning of a series of positive catalysts... many of which will reinforce the viewpoint that TSLA deserves a big premium and cause recalculation on the biggest issue of all... that Tesla can ship the Model 3 in 2017. Right now, that is significantly discounted, so the big premium you think TSLA doesn't deserve will get even bigger as we see more evidence that the Model 3 will ship in 2017. We are also seeing the mounting evidence that Tesla Energy is coming out of its very early stage startup mode and is winning contracts and will have real revenue in 2017. Trading just based on the fact you think that TSLA doesn't deserve a big premium is essentially trading on emotion, as what can go right with TSLA can go very, very right and completely whack your viewpoint. In the end, it's a judgement call on the likely execution of TSLA versus its various competitors. Thus far, even with the Model X launch problems, TSLA has been executing far better than its various competitors.

 

[schonelucht]

Tesla’s Short Squeeze Unwinds as Borrowing Costs Fall

Not today (so far).

From that article

A record date hasn’t been publicly announced for the merger vote, but disclosures and materials on Tesla’s website suggested the record date was set to be sometime last week. A spokeswoman for Tesla directed us to the recent disclosures.

Why do they not give the record date to a WSJ journalist while the IR VP has no issue emailing to (no disrespect intended, @vgrinshpun) a random user of this board when asked the question?!?

 

[winfield100]

A 2-year lease just puts them right in time to order and pick up their model 3's.
What to do with the leases after they're returned? the CPO program seemed to be pretty successful at getting people into a BEV and NOT purchasing an ICE in the process.

2nd level of aspirational EV buyers.
(was there a gasoline shortage in 6 states in the USA a few weeks back? )
I didnt notice as the battery on my PHEV was always full

 

[Drivin]

Actually, I think you are trading on emotion and very little on quantitive measures.
.

What quantative measures support the current valuation of the company?
P/E?
Comps?
DCF?
FCF?

Of course there is emotion on trading this stock: "they will revolutionize the industry", "it is the best car ever", etc.

 

[Papafox]

Looks like the shorts are trying to breach 205 again today. They couldn't yesterday (after 3 tries) and the number of shares available at IB to short suggests the shorts have less ammo available today than yesterday. If 205 is successfully defended today, it is likely safe on Thursday and definitely safe on Friday.

What is the lowest price at which you'll be able to pick TSLA up before Friday? That's the big question, but I'd be surprised if it is much less than 205.A likely scenario would be that we see higher lows today than yesterday, and higher lows on Thursday compared to today. The only way I see this situation changing is if there's a tremendous influx of shares to short later today or Thursday and the shorts make a particularly bold move, but every day the chances of such a move diminish.

What would put the bulls in the driver's seat would be a dip like we're seeing now and then a really strong climb immediately thereafter. At some point this week I think we're going to see a strong climb.

 

[3Victoria]

I keep trying to write a post outlining the bull arguments but they have already been made better by others, including EM and Tesla. Many entities have vested interests to misinform and misconstrue. The whole demand 'problem' is a case in point -- it takes a leap of faith to accept the "if you build it they will come" --- I can't think of a better example of this saying than the building of a compelling EV.

 

[NOLA_Mike]

I think @myusername stated his case quite reasonably and based on outstanding short interest in $TSLA I suspect there are many reasonably thinking individuals that agree with him. As a matter of fact, many of his points are concerns of mine - they just don't override what I believe the positives to be.

I also think the bulls have stated their case adequately.

Sometimes you just have to agree to disagree and let time tell who was right and who was wrong.

Mike

 

[NOLA_Mike]

An interesting history of borrowing rates for $TSLA shares at IB since the first of the year.

 

[FredTMC]

Looks like the shorts are trying to breach 205 again today. They couldn't yesterday (after 3 tries) and the number of shares available at IB to short suggests the shorts have less ammo available today than yesterday. If 205 is successfully defended today, it is likely safe on Thursday and definitely safe on Friday.

What is the lowest price at which you'll be able to pick TSLA up before Friday? That's the big question, but I'd be surprised if it is much less than 205.A likely scenario would be that we see higher lows today than yesterday, and higher lows on Thursday compared to today. The only way I see this situation changing is if there's a tremendous influx of shares to short later today or Thursday and the shorts make a particularly bold move, but every day the chances of such a move diminish.

What would put the bulls in the driver's seat would be a dip like we're seeing now and then a really strong climb immediately thereafter. At some point this week I think we're going to see a strong climb.

Yep. Good call. Nice Bounce there. It coincided with the NASDAQ and S&P 500 bouncing. Directionally the same.

 

[austinEV]

An interesting history of borrowing rates for $TSLA shares at IB since the first of the year.

View attachment 196649

Woah that is crazy. I didn't even register the recent blip up it was so high. So, this is objective evidence that the recall happened squeeze-free then. And it is right on the record date, so evidence that the market judged that was the record date if one doubts @vgrinshpun's email.