2017 Investor Roundtable: TSLA Market Action

[TMSE]

Goodness gracious. If The SP goes down big tomorrow, I might have to back up the truck. It's amazing to me that people still compare TSLA to F. To quote Elon: 'I wouldn't want to be them'

What?? Did Elon really say that in the EC today? I missed it.

 

[TrendTrader007]

Last year Q2 results missed badly on pretty much every measure but the share price rose the next day entirely because of forward guidance. I wouldn't be surprised if the same happens tomorrow. Model 3 is on track, and that's all that really matters. I don't think anyone will be too disappointed about MS/X leveling off - this actually seems really good considering they will be sharing demand with the more affordable M3, whereas before they were the only option if you wanted a great EV with supercharging etc.

I agree. I spent the whole evening listening to CC, read the shareholder letter and compared #s. Everything looks great. Revenues increased 135% YOY compared to 88% YOY last quarter and 18% sequentially this Q over last Q. Highly impressive. Margins are improving and most importantly M3 is right on schedule with super high demand
I see absolutely no reason to sell personally and I'll continue to hold all my shares and calls and meet all my margin calls as they come
I would not be surprised to see a positive reversal tomorrow after a lower open and even if shorts succeed in selling it off tomorrow the stock will bounce in the next few sessions
Of course I was wrong about last few days and today so please don't take my views seriously but I'm holding firm in my resolve to stay superlong this great company

Oh! And all the trolls and clowns calling out longs just give it a few weeks to months and let's see who has the last laugh

 

[Mike Smith]

I agree. I spent the whole evening listening to CC, read the shareholder letter and compared #s. Everything looks great. Revenues increased 135% YOY compared to 88% YOY last quarter and 18% sequentially this Q over last Q. Highly impressive. Margins are improving and most importantly M3 is right on schedule with super high demand
I see absolutely no reason to sell personally and I'll continue to hold all my shares and calls and meet all my margin calls as they come
I would not be surprised to see a positive reversal tomorrow after a lower open and even if shorts succeed in selling it off tomorrow the stock will bounce in the next few sessions
Of course I was wrong about last few days and today so please don't take my views seriously but I'm holding firm in my resolve to stay superlong this great company

Oh! And all the trolls and clowns calling out longs just give it a few weeks to months and let's see who has the last laugh

I also think what he said about Tesla Semi sounded really positive - easy to build, shared components with M3, high margins.

 

[larmor]

This reminds me of amzn a few quarters ago where they went from 360 to 320, allowing those who wanted to get out graciously. Last stop was 900+...
Tsla is on rails now, and if someone wants out, the market will oblige. The near short term is written and the energy market they are creating and filling is going to skyrocket...

 

[TradingInvest]

Those who frequently buy high sell low, you are helping the shorts to stay alive. If this has been a persistent problem for your account, message me, I can help you set up some rules. I have been doing an "investment + trading" approach which worked really well for me. I have a separate thread to explain how it works. It's easy to follow without stress.

If you care about Tesla, care about making money, you seriously need to take a look of your approach and fix the problems. I hope every Tesla supporter do well. Every dollar you lost through the buy-high-sell-low process should be worth twenty dollars down the road, so don't take the loss lightly.

I do think TSLA will reach $3000 in less than 10 years. But no one can predict the path with high reliability. Find the best approach for your situation.

 

[22522]

What?? Did Elon really say that in the EC today? I missed it.

He did say, "I would not want to be them." In reference to automakers who don't know how to write factory robot control software that scales well.

I don't know how much Tesla applies the stuff they learn about AI to make factory robot software scale well/automatically.

People in Silicon Valley think they are smart and generally they are, but sometimes they may focus more on politics than on architecture. So they have their own version of the Detroit disease.

 

[TrendTrader007]

Gap support at $295 to 290
50 day moving average support at $280
$270 next support level
So we go down another 13% from today's close or 18% off ATH worst case scenarios
Big freaking deal
Considering that this stock will continue to make new ATH from here on forward as M3 ramps up I couldn't care less for short term pain. I'll gladly endure all my margin calls and steep option losses for a chance to make much more in this truly great stock over the next several months and years

 

[myusername]

Those who frequently buy high sell low, you are helping the shorts to stay alive. If this has been a persistent problem for your account, message me, I can help you set up some rules. I have been doing an "investment + trading" approach which worked really well for me. I have a separate thread to explain how it works. It's easy to follow without stress.

If you care about Tesla, care about making money, you seriously need to take a look of your approach and fix the problems. I hope every Tesla supporter do well. Every dollar you lost through the buy-high-sell-low process should be worth twenty dollars down the road, so don't take the loss lightly.

I do think TSLA will reach $3000 in less than 10 years. But no one can predict the path with high reliability. Find the best approach for your situation.

ugh... i'm sorry... but I just can't let this go... right up to where you gave your 10 year projection i was like: "yeah... reasonable attitude."... but people need to stop projecting their $500b market cap projections on this while also sounding reasonable. this is disingenuous to investors who might get completely crushed if this drops back to $220 or lower...

there is extreme risk in this stock... many are ok with that and are totally aware of it... but there is very real risk of catastrophic loss here.

when people say "I think $3000 in 10 years is totally possible"... it only suggests that $300 or $500 or $700 is cheap... it's not...

this is the one of the most expensive stocks that's ever existed... anyone that suggests 10 fold is just playing you... because they have zero certainty... zero... but they conveniently don't say that.

 

[Mike Smith]

I wonder if Tesla delayed the solar roof until after earnings to stamp out any potential shorting after the miss.

 

[neroden]

Fantastic post, this is why I come here.

Thanks. FWIW I'm not expecting the shorts to be forced out any time soon -- all along I've been thinking it'll happen after Model 3 has been out for a while. (If Model 3 comes out in late July, Q3 numbers still won't look that great, and it's the likely-to-be-very-good Q4 numbers which will have the major effect on chasing short-sellers away. So Feburary 2018, perhaps, at the earliest.)

Given the losses this quarter, I suspect TSLA won't qualify for the S&P until end of after Q2 2018 (released August 2018). It could be quite a disruptive addition; the success of Model 3 in Q4 2017 / Q1 2018 should be obvious and is likely to lead to an even larger market cap before TSLA is added to the S&P. It's messy when a very large cap stock gets added (not so messy when a stock gets added to the "bottom" of the list).

I'm still kind of gawping at the market action in the last few months because when I bought lots and lots around $180 I was thinking "Oh, it'll probably go to $300 by the end of 2017." Well, it isn't the end of 2017 yet. The pullback after-hours on "disappointing" earnings is still above my second-to-last buy, and my last buy is down 3.5%, which is noise considering how volatile this stock is. (I managed to buy some at $280 in 2014, which was probably my worst-timed purchase... but it's up now, of course.) I do finally have enough stock that I'm not going to kick myself if the stock does go up forever, so that makes me less likely to buy more unless it gets way cheaper, thank goodness.

I guess markets anticipate the future, which is why the runup happened nine months before I expected it to. You have to anticipate *more* than the market is anticipating (see further into the future) in order to make a profit.

 

[generalenthu]

He did say, "I would not want to be them." In reference to automakers who don't know how to write factory robot control software that scales well.

I don't know how much Tesla applies the stuff they learn about AI to make factory robot software scale well/automatically.

People in Silicon Valley think they are smart and generally they are, but sometimes they may focus more on politics than on architecture. So they have their own version of the Detroit disease.

Last quarter there was a freudian slip. Elon mentioned about the Machine that designs the machine. Then I think he corrected himself and went to machine that makes the machine. I did feel at that time that it was not a casual mistake. Probably they have been talking about this internally for a while

They have been thinking about this for a while and are tipping their hand only now.

 

[neroden]

#7 Last ER SP gapped DOWN - 6.4 % on 2/23/17
10/26/16 ER SP closed up all of 0.88 % and went downhill from there
8/3/16 ER SP went up all of 2.13 % and went downhill from there
5/4/16 ER SP was rewarded with DOWN - 4.96 % and went downhill from there
2/10/16 ER was the last good ER as far as SP where TSLA went UP 4.73 % next day and mounted a furious rally of approx 79% in less than 2 months ( which in current situation could take SP to approx $570)

So, my dear reader what is the probability of tomorrow's ER failing my bullish expectations?

This turned out to be the most useful prediction. The 2/10/16 ER was the exception because the stock had gone stupidly low just beforehand (it had hit $151.04 for no reason whatsoever on Feb 12)

So we can expect the stock to drop after ER, typically. Doesn't seem to stick over the long run though...

 

[Richgoogol]

Last year Q2 results missed badly on pretty much every measure but the share price rose the next day entirely because of forward guidance. I wouldn't be surprised if the same happens tomorrow. Model 3 is on track, and that's all that really matters. I don't think anyone will be too disappointed about MS/X leveling off - this actually seems really good considering they will be sharing demand with the more affordable M3, whereas before they were the only option if you wanted a great EV with supercharging etc.

The only problem with this speculation is that Q2 of last year, the share price was around low $200 and a lot of longs were waiting on the sideline to buy more shares when bottom is formed. But currently it's already over $300, investors had so much expectation going into the earnings that they had already accumulated lots of shares, count me in as one of them. And plus, this earnings is so controversial I don't believe the shorts will back off since they have a lot of negative things to say too. It's gonna be another tug of war between the shorts and the longs. Prepare yourself for a drop due to a lot of the weak longs gets scared. But I'd love to be wrong since I'm in the same boat as all of you.

 

[22522]

Last quarter there was a freudian slip. Elon mentioned about the Machine that designs the machine. Then I think he corrected himself and went to machine that makes the machine. I did feel at that time that it was not a casual mistake. Probably they have been talking about this internally for a while

They have been thinking about this for a while and are tipping their hand only now.

I don't know... The only pattern I see where there is enough ambiguity in a factory where AI is needed/helpful is in learning different jobs on start up (training). Once running there is adaptation for small variation in parts. Have not thought about it enough to see opportunity for AI beyond time/material flow/management - again on setup. Not close enough to add. Someone would need to walk me through.

 

[TrendTrader007]

This turned out to be the most useful prediction. The 2/10/16 ER was the exception because the stock had gone stupidly low just beforehand (it had hit $151.04 for no reason whatsoever on Feb 12)

So we can expect the stock to drop after ER, typically. Doesn't seem to stick over the long run though...

Yeah! I was really expecting TSLA to go up after this ER based on probability of breaking the losing trend after ER but I was clearly wrong. In any case, longer term I have zero doubt about SP hitting new highs
I'm mentally prepared for a drubbing tomorrow even though I see no cause for it since other than bigger than expected EPS loss everything else looks stellar . Therefore I highly doubt that the SP will stay down for too long

 

[neroden]

Thank you for this analysis. It was overall very informative, helpful, and I loved it.

I agree with the majority of your conclusions. The following are three points on which I would challenge you.

• I agree that Elon probably will not sell any meaningful number of shares anytime soon, but it's difficult to gauge at what price Fidelity/T.Rowe/Bailie Gifford would scale back on their ownership.

This is why I dug up the history of their trades at a site called rocketfinancial and looked up public statements by the individual fund managers. T Rowe seems to sell quite often, Bailie Gifford does not, and *some* Fidelity funds sell, but not Contrafund or OTC.

• I'm not sure if I agree that the Vanguard index funds would need to add more shares as TSLA goes up. Can you explain this some more? Wouldn't the value of their TSLA holding go up in-line with TSLA's market cap as the share price goes up?

You're right; I didn't get this quite right. Luvb2b explained it correctly. With Tesla issuing stock and other major companies buying back stock, you can't be market-cap weighted by holding the same number of shares. So if prices stay constant, you have to buy more Tesla whenever they issue stock and sell more of the other companies whenever they buy back stock. The point is that they can't sell TSLA unless people sell out of the index funds (which could happen, that's macro-linked).

• A short squeeze may happen before S&P500 inclusion, which requires the sum of the most recent four consecutive quarters’ Generally Accepted Accounting Principles (GAAP) earnings (net income excluding discontinued operations) should be positive as should the most recent quarter (this is often misrepresented in this forum so take note), and I don't expect this to happen until 4Q17 at the earliest and possible not until 2H18. If the Model 3 ramp up remains on track for 100k+ deliveries in 2H17, a short squeeze may happen before TSLA is added to the S&P500 index.

Agreed. The sum of those quarters is very unlikely to be positive until end of Q1 2018, maybe not until end of Q2 2018.

Thank you again for taking the time to do the research and sharing your thoughts with us.

 

[neroden]

If, as has been surmised, tencent now has somewhere between 15-19% of TSLA

They don't. They have to file if they hit 10%. It's between 5% and 9%.

 

[neroden]

Do you really think that someone who's buying a $60,000+ Model S cares about a $85/yr registration fee?

The worry is that this'll turn into a Georgia-style $300/year penalty for having an electric car.

Electric cars should absolutely not be forced to pay a special tax for not using gas. If they need more road revenue, they can raise EVERYONE's registration fee, or charge EVERYONE an odometer tax, or whatever. This is worth campaigning on. It's not as if people who buy gas over the border in another state contribute to the road maintenance fund -- why aren't they proposing raising registration fees for them?

 

[racer26]

This turned out to be the most useful prediction. The 2/10/16 ER was the exception because the stock had gone stupidly low just beforehand (it had hit $151.04 for no reason whatsoever on Feb 12)

So we can expect the stock to drop after ER, typically. Doesn't seem to stick over the long run though...

If you ask me, this prediction is like Technical Analysis. It works really great until the fundamentals slap you in the face. One ER coming soon its all going to change, and TSLA will start reporting big fat juicy numbers and then it will gap-n-go on a big earnings beat.

 

[Zhelko Dimic]

ugh... i'm sorry... but I just can't let this go... right up to where you gave your 10 year projection i was like: "yeah... reasonable attitude."... but people need to stop projecting their $500b market cap projections on this while also sounding reasonable. this is disingenuous to investors who might get completely crushed if this drops back to $220 or lower...

there is extreme risk in this stock... many are ok with that and are totally aware of it... but there is very real risk of catastrophic loss here.

when people say "I think $3000 in 10 years is totally possible"... it only suggests that $300 or $500 or $700 is cheap... it's not...

this is the one of the most expensive stocks that's ever existed... anyone that suggests 10 fold is just playing you... because they have zero certainty... zero... but they conveniently don't say that.

There are only two things investors(NA for traders!) need to know to decide if they want to be in Tesla:
- is Tesla still executing? (delays are fine)
- Are there still plenty of doubters?
If answer to both of these questions is YES, TSLA continues climbing wall of worry (long term, no comment about short/mid term)