2017 Investor Roundtable: TSLA Market Action

[zdriver]

Not sure if I missed someone posting this yet, but this was as of early this morning -

Ihor Dusaniwsky‏ @ihors3

$TSLA short interest is $9.8 billion, down $233 mm or 2%, in last 3 weeks but starting to see more shorting today. @S3Partners

 

[geneclean55]

There will always be short interest in TSLA, even though it will diminish. People still short Apple. Some degree of short interest can be beneficial.
Short interest won't need to go to zero for a squeeze to take place. Just need a decent amount of the current shorters to cover, and they will be replaced at some point (but to a lesser degree) by new shorts.

Spiegel is ranting and swearing at every thing TSLA related today. Directly cussing out Fred Lambert, blaming price rise on Chinese money and not even considering covering a reason instead. Super angry. It is really obvious that he is experiencing a lot of stress on this now. I wonder if that is representative of many other shorts. What if we close in on 360 towards the end of the week. That will be a ~60 dollar move in ~ 2 weeks. Is that sustainable for many shorts?

 

[adiggs]

Is your idea that the institutionals will not be clued-in to a squeeze and won't be working to get a LOT out of it? I would think these guys are licking their chops at the prospect and are just waiting to get shorts over the barrel.

No - I do think that the institutions will be looking to get a lot out of the opportunity.

Just that their motivation is fundamentally different from Porsche's in the VW squeeze situation. Porsche was actively working to take enough control of VW stock, to take over control over the company. Rules in the German stock market, at least then, were also different (the VW squeeze is one reason why the 5% ownership information is important to you and I as itty bitty stock holders).

Here's the article I've used for my own history lesson on the squeeze:
Porsche: The Hedge Fund that Also Made Cars

That idea of a single market participant attempting to take control of the company is a different dynamic from anybody I know of investing in Tesla, with the possible exception of Elon. And Elon has been maintaining his share of the company, rather than trying to figure out how he goes from ~20% to ~51%. The control factor to me introduces a completely different motivation.


That's why I see the institutions acting each in their own interest and their own investment method as the share rises. Some of them may have restrictions on the % of their portfolio can be in a single company, and find themselves divesting as the price goes up to avoid violating those restrictions (thus, shares available for purchase).

Others, just as among the individuals here in the crowd that own shares, will decide the top has been reached at different points. Or achieve personal objectives and cash out to lock in those gains.

For instance, I'm pretty sure I sell at $2700 regardless of what I see the future like at that point for the company, because it's hard for me to paint a scenario in which I don't invest the resulting money in a mix of the safest stuff I can find, and have the money on hand to live out the rest of my life free from worries about money. Some of us will be exiting at $500 and others at $1000, and that'll relieve some of that upward pressure that will see us through to $2700.


In the end, it's the core difference between a single actor with a clear and unambiguous (at least to them) intent and objective, and a bunch of actors with similar but different motivations.

 

[ValueAnalyst]

think some more about who I might mean by the deepest of pockets. hint, dropping $25 billion would be "child's play" to repeat a phrase from Elon. as I wrote, I'm not talking about someone looking to make money directly on the short trade, but rather to pay some money in that trade as an investment to, at one point, end, and now more so, slow down, Tesla and the transition from fossil fuels.

I certainly understand the importance of the situation to some interested parties.

Keep in mind, however, that those parties are about to lose several dozen billions very soon.

I doubt that anyone on Earth can come back with several dozen more billions to risk, only to potentially lose a couple hundred billion.

It's not like dropping $25 billion solves the problem they have. It's one thing shorting a $30 billion market cap stock. It's a completely different thing shorting a $300 billion market cap stock.

Finally, keep in mind that on the long side, as well, there are some big players.

 

[SteveG3]

I certainly understand the importance of the situation to some interested parties.

Keep in mind, however, that those parties are about to lose several dozen billions very soon.

I doubt that anyone on Earth can come back with several dozen more billions to risk, only to potentially lose a couple hundred billion.

It's not like dropping $25 billion solves the problem they have. It's one thing shorting a $30 billion market cap stock. It's a completely different thing shorting a $300 billion market cap stock.

keep thinking re who I might be referring to, lols. and, we were talking about something like $25 billion, not a couple hundred billion.

 

[ValueAnalyst]

keep thinking re who I might be referring to, lols. and, we were talking about something like $25 billion, not a couple hundred billion.

I know who/what you mean.

Here's the thing though:

First, 10% short position on a $250 billion company can't influence it as much as a 25% short position on a $40-50 billion stock.

Second, just because you have a large short position, doesn't mean the stock will go down, as the shorts are now finding out.

Third, even if you somehow put together $100 billion to short 40% of a $250 billion market cap stock, and it goes up, then you're...

I don't know if there's a word for that.

 

[Ameliorate]

I know who/what you mean.

But here's the thing though:

First, 10% short position on a $250 billion company can't influence it as much as a 25% short position on a $40-50 billion stock.

Second, just because you have a large short position, doesn't mean the stock will go down, as the shorts are now finding out.

Third, even if you somehow put together $100 billion to short 40% of a $250 billion market cap stock, and it goes up, then you're...

I don't know if there's a word for that.

clinching?

 

[Jonathan Hewitt]

It is starting. Our thesis that there won't be enough batteries to meet demand for EVs is already happening. Once again TSLA has shown foresight where others thought they could just throw money at problems down the line.

Hyundai Ioniq Production Held Up by Battery Shortage

 

[MikeC]

Tesla, Sunrun expected to resume Nevada rooftop solar sales

Looks like the Nevada PUC decision that killed net metering, and SCTY stock price, could be reversed by new legislation. Now we definitely know Tesla got SCTY on sale.

 

[LargeHamCollider]

So what would happen if Tencent filed a 13G tomorrow showing 10% ownership?

 

[sunhelm]

So... is this "buy on the rumor" momentum in anticipation of what is probably going to be another pointless annual shareholder meeting, or is something else going on?

The fact that Tesla was soliciting questions via Twitter was mildly encouraging. I just cannot help but be cynical after the shareholder question from the past 2 years.

I wonder if there was some encouraging info at the model 3 event over the weekend that further encouraged investors to double down? Wishful thinking and all but a similar rise happened I recall after the Gigafactory tour when it was brought online early January.

 

[ValueAnalyst]

T-Bone!

For international TMC readers:

 

[Cattledog]

So what would happen if Tencent filed a 13G tomorrow showing 10% ownership?

Falcon heavy liftoff?

 

[anticitizen13.7]

I wonder if there was some encouraging info at the model 3 event over the weekend that further encouraged investors to double down? Wishful thinking and all but a similar rise happened I recall after the Gigafactory tour when it was brought online early January.

I scanned many sources from here to Reddit, and as far as I could tell, during the event, Tesla officials deflected almost all inquiries into anything related to Model 3. It was more a Q&A with Franz von Holhausen about general design at Tesla.

What I'm looking for as far as the shareholder meeting tomorrow is indications of launch and ramp timing. The more certainty, the bigger the boost to the stock IMO. Whether the stock maintains growth after that depends on Tesla delivering the goods.

 

[SteveG3]

I know who/what you mean.

Here's the thing though:

First, 10% short position on a $250 billion company can't influence it as much as a 25% short position on a $40-50 billion stock.

Second, just because you have a large short position, doesn't mean the stock will go down, as the shorts are now finding out.

Third, even if you somehow put together $100 billion to short 40% of a $250 billion market cap stock, and it goes up, then you're...

I don't know if there's a word for that.

I'm talking about a possible scenario of player(s) with a vested interest in the fossil fuel economy trying to impact Tesla's path, not some hedge funds looking to turn some money on a Tesla play.

In this scenario I'm talking about pooled massive massive wealth that would not blink at dropping $10 billion by 2020, or $25 billion to use your idea of a bullish 2020 TSLA price rather than mine.

If all of this has been going on, probably most of the downward influence below fair value has already been spent, reinforcing the false notions that Tesla is a bubble stock, cult stock, stock with no rational justification for it's stock price, etc. etc. ("one of the 3 most shorted stocks..." repeated over and over helps with that), which I find it all but certain have depressed TSLA's price both pre-2013, when Tesla very well could have gone under without more funding, and from 2014-2017 when the stock was basically sideways, and Tesla just completed a capital raise with the stock about 35% below what I considered fair value when it traded at $250.

In this hypothetical scenario, I think such players will keep that, let's say, "strategic" position a few more years, and back out of it gradually. They would want to minimize the appearance of "the shorts" capitulating, to minimize the sense that the bears were wrong, bulls right, and we've already made steps into the Tesla future. They may be fine holding such a short until it's plainly obvious to almost all that EVs are the future (likely in the early 2020s) rendering continuing the short position pointless. Don't get me wrong, even in this speculative theory, I think there are many other shorts, and they may well capitulate quite a bit soon, as is often discussed on this forum, but, the players I'm speculating about would likely want to avoid adding to the specter of such a large closing of short positions in such a small timespan reading out as "it's over, the bulls had it right."

This is all theoretical, so we could discuss this on and on, what' likely more interesting is just to watch the size of that short position. Let's see if it finds a home below 10% before 2020 or not. My sense is not, though I don't have strong conviction about that or this whole theory... my confidence is something over 50% on all this, but, not strong conviction.

 

[Starno]

Falcon heavy liftoff?

 

[sunhelm]

I scanned many sources from here to Reddit, and as far as I could tell, during the event, Tesla officials deflected almost all inquiries into anything related to Model 3. It was more a Q&A with Franz von Holhausen about general design at Tesla.

What I'm looking for as far as the shareholder meeting tomorrow is indications of launch and ramp timing. The more certainty, the bigger the boost to the stock IMO. Whether the stock maintains growth after that depends on Tesla delivering the goods.

That is to be expected due to the NDA. But I understand there was a "special" tour of the factory, so maybe seeing a dreadnaught 0.5 assembly line might have left then impressed.

 

[ValueAnalyst]

I'm talking about a possible scenario of player(s) with a vested interest in the fossil fuel economy trying to impact Tesla's path, not some hedge funds looking to turn some money on a Tesla play.

In this scenario I'm talking about pooled massive massive wealth that would not blink at dropping $10 billion by 2020, or $25 billion to use your idea of a bullish 2020 TSLA price rather than mine.

If all of this has been going on, probably most of the downward influence below fair value has already been spent, reinforcing the false notions that Tesla is a bubble stock, cult stock, stock with no rational justification for it's stock price, etc. etc. ("one of the 3 most shorted stocks..." repeated over and over helps with that), which I find it all but certain have depressed TSLA's price both pre-2013, when Tesla very well could have gone under without more funding, and from 2014-2017 when the stock was basically sideways, and Tesla just completed a capital raise with the stock about 35% below what I considered fair value when it traded at $250.

In this hypothetical scenario, I think such players will keep that, let's say, "strategic" position a few more years, and back out of it gradually. They would want to minimize the appearance of "the shorts" capitulating, to minimize the sense that the bears were wrong, bulls right, and we've already made steps into the Tesla future. They may be fine holding such a short until it's plainly obvious to almost all that EVs are the future (likely in the early 2020s) rendering continuing the short position pointless. Don't get me wrong, even in this speculative theory, I think there are many other shorts, and they may well capitulate quite a bit soon, as is often discussed on this forum, but, the players I'm speculating about would likely want to avoid adding to the specter of such a large closing of short positions in such a small timespan reading out as "it's over, the bulls had it right."

This is all theoretical, so we could discuss this on and on, what' likely more interesting is just to watch the size of that short position. Let's see if it finds a home below 10% before 2020 or not. My sense is not, though I don't have strong conviction about that or this whole theory... my confidence is something over 50% on all this, but, not strong conviction.

I agree that we can talk about this forever and not come to an agreement. So let's make a bet:

I expect short interest (as defined by Yahoo Finance) to drop below 10% by the end of 2017, never to rise above 10% again.

 

[Intl Professor]

You'll know *for sure* when it happens. No "I think" stuff.

It's like falling in love.

I was never that young!

 

[SteveG3]

I agree that we can talk about this forever and not come to an agreement. So let's make a bet:

I expect short interest (as defined by Yahoo Finance) to drop below 10% by the end of 2017, never to rise above 10% again.

Great idea, and we won't have to wait as long as 2025 like our other bet to see how this plays out : )