2017 Investor Roundtable: TSLA Market Action

[neroden]

It's at $240 for Jan 18.....

Does that mean anything would you say? Or is max pain more of a short-term phenomenon?

Max pain is much more of a short-term phenomenon. Also only really affects expiration dates with a *lot* of open interest. I only really watch it on monthly and quarterly expiration dates, and there's no point in looking more than a week in advance.

 

[neroden]

Tires.

So if the ICE car compatibility layer is tires, that implies that the no-compatibility-needed ultimate vehicle is an electric train?

 

[ValueAnalyst]

Max pain is much more of a short-term phenomenon. Also only really affects expiration dates with a *lot* of open interest. I only really watch it on monthly and quarterly expiration dates, and there's no point in looking more than a week in advance.

I've been leaning towards that view as well. It helps to have confirmation from someone with your level of knowledge.

 

[neroden]

I used to think that way too, that retail investors are too small to move the market, but if retail investors are so unimportant, then why are they spending tens of milions of dollars on this campaign? Why are they writing dozens of hit pieces on SeekingAlpha every week? There's a team ~10 contributors who respond literally every single positive comment (and each Tesla article gets 1,000+ comments and tens of thousands of views) in order to create doubt. Why?

There's gotta be a reason.

Money managers who manage Other People's Money are much more common than do-it-yourself retail investors and just as easy to manipulate. If not easier. The campaign is not designed to influence me or TrendTrader. It's designed to influence the people who manage hundred-million-dollar funds with way too many stocks in them, who spend only a tiny fraction of their time looking at Tesla.

 

[austinEV]

Possible ignitions for a short squeeze:
Gigafactory 3/4/5/6 full build-out guidance: timeline (by 2020/21) or cost (less than $5 billion) or capacity (more than 1.5m/yr each)

I suspect this would be a negative. Cap ex concerns. They need to keep the specifics quiet until the model 3 is accretive, for best stock results (the company likely doesn't care and won't follow my advice)

Max capacity revisions to Gigafactory 1 or 2 to 1.5m+ cars/yr and 2GW, respectively, by 2020. Why else acquire Grohmann?
100k+ Solar Roof reservations "in just two weeks"
Guidance for Tesla Semi ramp-up by the end of 2018 and gross margin 20%+ soon thereafter
Model 3 EBIT margin guidance of 5%+ at $42,000-45,000 ASP at 10,000 units/w
Model 3 "final reveal" event in July pushing Model 3 reservations to 1m+ in 3Q17
Model 3 ramp-up to 5,000/w in 4Q17
Combined Model S/X gross margin (incl. autopilot) exceeding 30% by 4Q17
Brent oil prices surging above $70 by 4Q17
Chanos throwing in the towel
and many more...
View attachment 228533

 

[Navin]

good read - this guy helped create a pop in tesla the day he presented
http://www.sohnconference.org/wp-content/uploads/2017/05/ChamathPalihapitiya_Presentation.pdf

 

[Starno]

I know we have argued back and forth on this and I am pretty sure I am mostly over estimating this, but, I cant for the life of me get beyond this idea that Solar Roof is absolutely huge compared to solar panels. I cant get over the fact the the solar roof ASP could be over $50k and the margins could be higher then solar as well due to the simplicity of the tiles themselves. The fact that they have to make billions of them actually helps justify getting Grohmann involved and leveraging custom machinery for making the tiles. Glass being cheap and easy to work with and all.

Based on that, I cant find a single residential solar company that has anywhere near a $1B revenues. Solar city was the only one that I could find. How is it not bigger news that even at 20,000 roofs in 2018, Tesla could have a $1B business from thin air that has potential, if you believe the recent Seeking Alpha article, which I usually dont, of nearly $50B a year in revs by 2024. I think that is a bit high, but I could see them getting 10% of that 5 million new roofs a year and an equal amount of tradition solar installs at 1/3 the ASP. They are also going to sell a crap load of batteries with those panels, which ratchets up the ASP as well and the GM should be north of 20% and probably north of 25% if they can really automate the solar tile manufacturing and improve the installation process. I think there will some focus on how these things are installed, because roofing is a very manual process. Tile roofs are already much harder to put down then asphalt and you will probably need special blades to even cut these tiles, to the point they may need their own installers.

I know $50B doesnt put a dent into the auto industry, I think it would be an epic amount for the solar industry. Longer term, solar roofs might be the only solar because as the cells get more efficient and as the tiles get cheaper to make, and even new formats that are much cheaper, no one will want panels when they need a new roof. I am thinking more like 2025 and beyond as the glut of solar panels start to age and costs come down on solar tiles.

Yes the Solar industry is on the verge to explode.

Little secret that I never told anyone : actually the first shares of Tesla I got, I never bought them. I got them through the Solarcity merger. Yep, I was a Solarcity shareholder way before Tesla.
Not because I didn't believe in Tesla, but because I saw on the mid term more potential to get baggers from Solarcity.

 

[ValueAnalyst]

(the company likely doesn't care and won't follow my advice)

I agree.

But I don't think the cap-ex concern matters. I know that's on retail investors' mind, but institutional investors like Fidelity and T. Rowe etc. realize the value in pulling forward exponential revenue/gross profit growth by spending a few more billion dollars.

Imagine if Tesla had 5+ Gigafactories running at 1.5m cars/yr by 2020/21, before anyone else finished their first one.

Massive.

 

[Starno]

Tesla Inc (TSLA) Is Hiring Engineers from Faraday

 

[zdriver]

Max pain is much more of a short-term phenomenon. Also only really affects expiration dates with a *lot* of open interest. I only really watch it on monthly and quarterly expiration dates, and there's no point in looking more than a week in advance.

Agreed. Definitely played a factor in today, albeit not in the way people normally imagine. The highest OI today were the 320 calls - 6k of them, or controlling 600,000 shares. Thanks to the effects of delta hedging, the closer it got to 320, the greater the tail wind up. As delta rises on those calls, market makers have to buy more shares to hedge their position and try to remain delta neutral. This effect naturally looses "push" the further away from $320, since those calls currently have a delta of about 0.8, just above $322 on the underlying.

It's important to note however, without this morning's momentum to push above 320 before 10:30-11am, this probably wouldn't have been possible, since as those $320's decay to nothing, people closing calls and market makers closing those hedges (selling shares) would begin to have increasing downward pressure. Same thing works in reverse with puts, providing a "wall" of "put support".

There were also a few moderate sized call sweepers for 322.5c around 11am, which coincide within minutes of the couple of upticks in algos buying on liquidity around that time:

 

[CaliBear1]

I think the last great TSLA buying opportunity will soon be upon us. I expect a significant but temporary dip in 4Q17 that will be the result of the Model 3 Osborne effect on MS and MX sales coupled with production delays on the 3 itself. The Osborne effect will become clear in late 2017 as S sales figures for the year come in. At the same time, the 3 production line will experience inevitable growing pains. Watch for when the first group of Tesla employees start receiving their cars. I have heard that won't be until November or December. That combination will send the FUDsters into a frenzy and push the stock down into the mid-200s. But, 1Q18 will see the 3 rapidly ramp up and put away any doubt whatsoever about the disruptive power of Tesla Auto and the stock will explode. The squeeze of which so many here speak has assumed an almost mythic quality to it. If it is going to happen, I believe it will be in 1Q18. So either keep some powder dry or begin accumulating powder! NOT AN ADVICE!

 

[geneclean55]

More news??

 

[Starno]

I think the last great TSLA buying opportunity will soon be upon us. I expect a significant but temporary dip in 4Q17 that will be the result of the Model 3 Osborne effect on MS and MX sales coupled with production delays on the 3 itself. The Osborne effect will become clear as the S sales slow the closer we get to production on the 3,while at the same time the 3 production line is experience inevitable growing pains. That combination will send the FUDsters into a frenzy and push the stock down into the mid-200s. But, 1Q18 will see the 3 rapidly ramp up and put away any doubt whatsoever about the disruptive power of Tesla Auto and the stock will explode. The squeeze of which so many here speak has assumed an almost mythic quality to it. If it is going to happen, I believe it will be in 1Q18. So either keep some powder dry or begin accumulating powder! NOT AN ADVICE!

By 4Q17 I expect the stock to be over 500. So you think that there will be a 50% dip ? lol

 

[zdriver]

More news??

Big buying spike from dark pools. They were slow sellers all day until now. Seems they've changed their mind on where they think price is going next...

 

[elasalle]

Could be the 3 day weekend ? Don't want to be thinking of short positions over vacations ...

 

[erha]

I think the last great TSLA buying opportunity will soon be upon us. I expect a significant but temporary dip in 4Q17 that will be the result of the Model 3 Osborne effect on MS and MX sales coupled with production delays on the 3 itself. The Osborne effect will become clear as the S sales slow the closer we get to production on the 3,while at the same time the 3 production line is experience inevitable growing pains. That combination will send the FUDsters into a frenzy and push the stock down into the mid-200s. But, 1Q18 will see the 3 rapidly ramp up and put away any doubt whatsoever about the disruptive power of Tesla Auto and the stock will explode. The squeeze of which so many here speak has assumed an almost mythic quality to it. If it is going to happen, I believe it will be in 1Q18. So either keep some powder dry or begin accumulating powder! NOT AN ADVICE!

Mostly agree! However, I think we can see a dip earlier than 4Q17. The Osborne effect might actually be happening right now. Seems like Tesla is pretty desperate at pushing Model S and making a point of Model S > Model 3. If deliveries for 2Q17 is lower than 1Q17 coupled with production delays which I think is inevitable we might see a dip.

I think people should be careful with options and margin. I'm all in, but would not use margin at this point. An advise

 

[geneclean55]

I like the caution. Usually indicates that the manic top is still a ways away.

 

[Reciprocity]

Mostly agree! However, I think we can see a dip earlier than 4Q17. The Osborne effect might actually be happening right now. Seems like Tesla is pretty desperate at pushing Model S and making a point of Model S > Model 3. If deliveries for 2Q17 is lower than 1Q17 coupled with production delays which I think is inevitable we might see a dip.

I think people should be careful with options and margin. I'm all in, but would not use margin at this point. An advise

I agree that there will be an Osborn effect, but I think its going to be more like a rubberband and it will have a fairly dramatic snap back in 1H2018. A couple of things are going to dramatically drive demand. The biggest will be the phase out of the Tax Credits which will begin in earnest in the first half of next year. The other is the success of the Model 3 will cause the Osborn effect, but it will also introduce the Electric car to people who have never heard of Tesla or assume electric cars where crappy still.

I think to take advantage, I think Tesla is going to build out a ton of inventory cars and they will be selling like crazy in 1H2018 because you wont be able to get a model 3 until 2019 if you reserve it at the end of 2017.

 

[winfield100]

On the other hand, the guy who shall not be named who hides his real identity, threatens anyone who corrects him in the comments to his articles, has deleted any evidence presented in the comments that he's been using false information, etc. -- there's something fundamentally dishonest going on there.

except for a slitely pudy picture of his reflection in a window, here on TMC, a very young looking pudgy for 30 years legal beagle experience, but what do i know...other than minions report back

 

[JRP3]

I think most of them are honest (both Paulo Santos and Anton Walhmann...

After reading some of his "Tesla killer" series, one of which included some offering from Jeep, I would not use "honest" in reference to Walhman. I don't believe for one minute he's dull enough to actually believe what he writes.
Also this Investors Win Victory Against UBS Warburg in Analyst Research Lawsuit