2017 Investor Roundtable: TSLA Market Action

[Hogfighter]

Will tomorrow's annual meeting be streamed live? When does it start? Could effect stock price dramatically if an announcement is made during the meeting

Traditionally very little new information has been presented at shareholder meetings. I've always been excited to hear something cool, only to hear some dude ask to be co-CEO.

 

[ValueAnalyst]

I almost quoted that in an earlier post, to explicitly state I do not think it applies here. I had in mind the FUD we've seen from Tesla. I think in the case of major financial media outlets, they know what they are saying is foolish, but want people to believe foolish things. It actually gets on my nerves a little when people just write off the kind of FUD we see as ignorance. Personally I wouldn't call it "malice", but I think in most cases these writers know what they put out is foolish.

Where tremendous amounts of money is at stake, perhaps Hanlon's Razor doesn't apply. I'm trying my best not to mention anything about politics, but, I'll falter a little and say, I don't think our political challenge is "stupid" politicians, but rather legalized bribery. Would you apply Hanlon's razor to what the bulk of our politicians are doing (not saying there isn't also some "stupidity", let's not name name's there, lols : ). Please note I'm talking about the current system, and I'm not singling out either party.

Keep in mind that most of the articles on financial media outlets are written or edited by journalists. I wouldn't underestimate how clueless most people are about finance/accounting/economics/batteries/physics etc which are all needed to fully understand that Tesla's potential is beyond cars.

We collectively have the luxury in this forum of getting insights from experts who satisfy all of that background requirement.

I agree with you on the politics side though. Corruption is the biggest enemy.

 

[Ocelot]

Clearly, we very much agree about what appears to have been, and is going on, and see it differently on when it ends. Maybe you have a better sense of the timing. Timing of the game ending I'm less confident of than that the game has been played.

fwiw, I guess the main reasons I think it won't be before 2020 that such a "strategic" short position will be let go are,

Tesla will move faster if it does more cap raises (said as much on last earnings call) and the higher the stock price, very likely the lower the resistance to more raises

I doubt that the non-luxury automakers will concede that long-range EVs are the future for another 5 years or so. That's about when I think this will be quite obvious to most consumers, and gibber-jabber from those automakers trying to pull the wool over people's eyes at that point won't do any good. So I could see the "strategic" short staying in play until we get closer to when the cards are on the table, nothing left to play poker about, we're going to long range EVs.

I am not sure what you consider 'luxury'. I consider Volvo up there....so this might not apply..but I just read (sorry not sure if Car and Driver, Motortrend or whatever) that Volvo plans to make only EV's from 2025 onwards. I think thats fantastic.

 

[SteveG3]

For what it is worth I think there is zero chance that you are correct on this. I don't believe a public company could even do this to the tune of 10's of billions, without either disclosing it, or massive accounting fraud. And I doubt any private oil interests are big enough, and dumb enough to try it. I can totally get on board with them throwing a couple million at shady PR firms to feed FUD stories to lazy, click hungry media outlets, but no way are they forming a secret consortium of shorts.

While I am super long, and am hoping for a short squeeze as much as everyone, I think it is a mistake to operate on the premise that it is completely inevitable, no mater what, either now or later. I don't think this will happen, but there is definitely a reasonable chance that a combination of model 3 launch missteps, and possibly a macro swoon, could easily knock Tesla back into the $100's over the next year, and the shorts could all exit with fat profits, that came strait from my account. I imagine that is the bet they are making, not some Kamikaze self destruction mission into a known coming tidal wave to slow it's progress.

@Snapdragon III and @ValueAnalyst,

I'm not talking about public company's.

As to other oil interests, consider this from JHM in another discussion (while I haven't verified it, from past experience I take JHM at face value),

"the exploration cost to replace barrels of reserve lost to production is about $10/b or $350B per year. Thus in 3 years the oil industry spends more that $1T just looking for new places to drill."

and consider the chart in this link (note some countries have multiple funds in the list)

Sovereign wealth fund - Wikipedia

There are clearly players many many times big enough to do it, and so, big, that dropping $10 to $20 billion would not be "dumb" at all if all one was considering was money.

I'm not saying this is happening. Obviously, it's speculative, but I think it is more likely than not. I get that views on this will differ and it's just theoretical, that's why, I thought VA and I had dropped discussing this here in favor of our bet, (ehem, VA, lols

 

[SteveG3]

I am not sure what you consider 'luxury'. I consider Volvo up there....so this might not apply..but I just read (sorry not sure if Car and Driver, Motortrend or whatever) that Volvo plans to make only EV's from 2025 onwards. I think thats fantastic.

Indeed, I do consider Volvo luxury. Basically anyone who will directly be heavily impacted by the S/X, 3 and Y (I do realize that the 3 & Y will pull some from the Toyota price range, but perhaps a million out of something like a 50 million unit market, not a million out of something like a 3 million unit market for the price ranges of the likes of Mercedes). Volvo, actually meets the two exceptions I see to the likely continuing overall industry move to punt on EVs... they are a luxury automaker, and they have Chinese ownership. Those two groups are more serious about moving to EVs than the rest of the industry, and happily, in the case of the Chinese ownership, willingly : )

 

[ValueAnalyst]

@Snapdragon III and @ValueAnalyst,

I'm not talking about public company's.

As to other oil interests, consider this from JHM in another discussion (while I haven't verified it, from past experience I take JHM at face value),

"the exploration cost to replace barrels of reserve lost to production is about $10/b or $350B per year. Thus in 3 years the oil industry spends more that $1T just looking for new places to drill."

and consider the chart in this link (note some countries have multiple funds in the list)

Sovereign wealth fund - Wikipedia

There are clearly players many many times big enough to do it, and so, big, that dropping $10 to $20 billion would not be "dumb" at all if all one was considering was money.

I'm not saying this is happening. Obviously, it's speculative, but I think it is more likely than not. I get that views on this will differ and it's just theoretical, that's why, I thought VA and I had dropped discussing this here in favor of our bet, (ehem, VA, lols

Well the "oil industry" that's spending that much money in exploration IS public companies. Plus, they get hundreds of billions back as oil revenue after investing huundreds of billions in exploration.

If they were to short TSLA, they'd have to disclose it, and they'd be throwing their money away vs. investing in exploration.

Those two aren't the same.

I think the key is that just because a stock has a large short interest doesn't mean it will fundamentally perform worse in the future.

Yes, Tesla could've raised more money if the stock price was higher at secondary issuance, but risking tens of billions of losses in a massive short squeeze to make it a billion or two harder for Tesla?

Unlikely.

 

[SteveG3]

Keep in mind that most of the articles on financial media outlets are written or edited by journalists. I wouldn't underestimate how clueless most people are about finance/accounting/economics/batteries/physics etc which are all needed to fully understand that Tesla's potential is beyond cars.

We collectively have the luxury in this forum of getting insights from experts who satisfy all of that background requirement.

I agree with you on the politics side though. Corruption is the biggest enemy.

That might of made sense in 2011-early 2013, but for 4 years, it's been the same characters clowning about Tesla over and over and over, on CNBC, Bloomberg, in the Wall Street Journal, Market Watch, the LA Times, Forbes, etc. Same names, they couldn't help but learn about Tesla. What's more, while the hosts of TV segments may have not had auto backgrounds, in most cases, the expert reporter in the TV segment, and the writer do.

I recently saw you comment re your taking the Seeking Alpha contributors falling under this umbrella, and mentioning Anton Wahlman. I can tell you that once a couple years back in the comments of a Tesla piece, Anton literally crowed to me with delight about his ability to argue either side of any argument with equal skill. It was after a several post exchange, and, he was basically saying, we both know I'm spewing BS, but, man, I'm good at it, right?

 

[ValueAnalyst]

That might of made sense in 2011-early 2013, but for 4 years, it's been the same characters clowning about Tesla over and over and over, on CNBC, Bloomberg, in the Wall Street Journal, Market Watch, the LA Times, Forbes, etc. Same names, they couldn't help but learn about Tesla. What's more, while the hosts of TV segments may have not had auto backgrounds, in most cases, the expert reporter in the TV segment, and the writer do.

I recently saw you comment re your taking the Seeking Alpha contributors falling under this umbrella, and mentioning Anton Wahlman. I can tell you that once a couple years back in the comments of a Tesla piece, Anton literally crowed to me with delight about his ability to argue either side of any argument with equal skill. It was after a several post exchange, and, he was basically saying, we both know I'm spewing BS, but, man, I'm good at it, right?

I do think there's a team of SeekingAlpha contributors who are malicious (I don't think I mentioned anyone specifically though, and I'm not sure who Anton is), but in my response, i was referring to CNBC/Bloomberg etc. The financial media. Sorry for the confusion.

 

[SteveG3]

Well the "oil industry" that's spending that much money in exploration IS public companies. Plus, they get hundreds of billions back as oil revenue after investing huundreds of billions in exploration.

If they were to short TSLA, they'd have to disclose it, and they'd be throwing their money away vs. investing in exploration.

Those two aren't the same.

I think the key is that just because a stock has a large short interest doesn't mean it will fundamentally perform worse in the future.

Yes, Tesla could've raised more money if the stock price was higher at secondary issuance, but risking tens of billions of losses in a massive short squeeze to make it a billion or two harder for Tesla?

Unlikely.

No.

I was really trying to find on Wikipedia a chart I saw a year or two ago that blew my mind. I guess its possible the chart was not correct, but, the in the chart it showed the oil revenues from the giant multinationals you and I know of (Exxon, etc.), dwarfed, profoundly dwarfed, by the money made by those sovereign nation entities. I'll see if I can dig something up showing this elsewhere.

 

[MP3Mike]

Will tomorrow's annual meeting be streamed live? When does it start? Could effect stock price dramatically if an announcement is made during the meeting

Starts at 2:30 PM Pacific time, so 1.5 hours after the market closes, so any impact would be felt Wednesday after people have had a chance to sleep on it. (Well other than AH trading.)

 

[SteveG3]

I do think there's a team of SeekingAlpha contributors who are malicious, but in my response, i was referring to CNBC/Bloomberg etc. The financial media. Sorry for the confusion.

that SA bit was just an add on.

I'm talking about CNBC and Bloomberg. You think Cory Johnson, Jim Cramer and Tim Seymour are just "dumb" about Tesla? No, they, the first two anyhow, probably know far far better what a fantastic generational investment Tesla is than most retail investors long Tesla. They are not dumb, they have some outside interest in trying to convince the public to think dumb things. I'm quite confident of this.

 

[tander]

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.

The thing I always wonder about short interest is how much of that number is long term shorts, and how much is hedge funds and quants that are in and out by the minute, hour, day, week, because to me the two are very distinctly different.

 

[Snapdragon III]

That might of made sense in 2011-early 2013, but for 4 years, it's been the same characters clowning about Tesla over and over and over, on CNBC, Bloomberg, in the Wall Street Journal, Market Watch, the LA Times, Forbes, etc. Same names, they couldn't help but learn about Tesla. What's more, while the hosts of TV segments may have not had auto backgrounds, in most cases, the expert reporter in the TV segment, and the writer do.

I recently saw you comment re your taking the Seeking Alpha contributors falling under this umbrella, and mentioning Anton Wahlman. I can tell you that once a couple years back in the comments of a Tesla piece, Anton literally crowed to me with delight about his ability to argue either side of any argument with equal skill. It was after a several post exchange, and, he was basically saying, we both know I'm spewing BS, but, man, I'm good at it, right?

As long as people like me and you and everybody else keep clicking on Tesla articles, positive and negative, they will continue. No grand conspiracy needed. The media is in the business of eyeballs, and advertising, not successful investment. If the quality of financial advice dispensed had anything to do it, every financial media company in the world would have been bankrupt many years ago.

 

[SteveG3]

No.

I was really trying to find on Wikipedia a chart I saw a year or two ago that blew my mind. I guess its possible the chart was not correct, but, the in the chart it showed the oil revenues from the giant multinationals you and I know of (Exxon, etc.), dwarfed, profoundly dwarfed, by the money made by those sovereign nation entities. I'll see if I can dig something up showing this elsewhere.

Okay, found what I was looking for. I am mistaken to say that the public companies are profoundly dwarfed. It's more that the biggest players are mostly national entities, and, to the point of our discussion, it is clear to me, this game could be played without assuming any of the public companies doing anything.

List of largest oil and gas companies by revenue - Wikipedia

fwiw, for the sake of this board, maybe the moderator could move this discussion into a separate thread, perhaps something like, "Who are the shorts, and when will they cover"

 

[MP3Mike]

I had a dry powder that I wasn't able to get loaded and lit today.

Now I can decide if I should try to light it tomorrow or wait until Wednesday...

 

[ValueAnalyst]

that SA bit was just an add on.

I'm talking about CNBC and Bloomberg. You think Cory Johnson, Jim Cramer and Tim Seymour are just "dumb" about Tesla? No, they, the first two anyhow, probably know far far better what a fantastic generational investment Tesla is than most retail investors long Tesla. They are not dumb, they have some outside interest in trying to convince the public to think dumb things. I'm quite confident of this.

I understand your frustration.

I do think however that Tesla's advantage over competition isn't very obvious, and definitely not in places analysts are trained to look first: profit margins.

Someone really needs to spend a lot of time digging into detail to fully get it. And it's just easier for these "analysts" to go with the crowd.

That's why the recent shift on Wall Street from negative to positive is so incredibly meaningful.

I think my favorite analyst Andrea James put it best (referring to April 2013) in her interview with Dave:

"People stopped asking 'what can go wrong? What can go wrong?' and started asking 'what can go right?'"

I think this is the shift we're seeing again.

 

[SteveG3]

As long as people like me and you and everybody else keep clicking on Tesla articles, positive and negative, they will continue. No grand conspiracy needed. The media is in the business of eyeballs, and advertising, not successful investment. If the quality of financial advice dispensed had anything to do it, every financial media company in the world would have been bankrupt many years ago.

Eyeballs definitely play a role, as does who is spending money to buy ads.

There's also this,

notice the critical step of getting your bs in "the Journal" and on CNBC.

 

[ValueAnalyst]

The thing I always wonder about short interest is how much of that number is long term shorts, and how much is hedge funds and quants that are in and out by the minute, hour, day, week, because to me the two are very distinctly different.

Given how relatively consistent the bi-weekly short interest data has been, id say the vast majority is long-term.

 

[ValueAnalyst]

This is positive:

Tesla, Sunrun likely to resume Nevada rooftop solar sales - Tesla Motors (NASDAQ:TSLA) | Seeking Alpha

 

[SteveG3]

I understand your frustration.

I do think however that Tesla's advantage over competition isn't very obvious, and definitely not in places analysts are trained to look first: profit margins.

Someone really needs to spend a lot of time digging into detail to fully get it. And it's just easier for these "analysts" to go with the crowd.

That's why the recent shift on Wall Street from negative to positive is so incredibly meaningful.

I think my favorite analyst Andrea James put it best (referring to April 2013) in her interview with Dave:

"People stopped asking 'what can go wrong? What can go wrong?' and started asking 'what can go right?'"

I think this is the shift we're seeing again.

was talking about the Cramer's and Corey Johnson's. As to Wall Street analysts, actually, as a group they have gotten it, but, been somewhat conservative with price targets while mostly having buys and some holds (they're average price target has been in the $200s for years, right? far far cry from the "Bubble stock", "cult stock" nonsense of Johnson and Cramer).

VA, I recommend you watch that 6 minute Cramer video I posted. Cramer came from the hedge fund world, I believe Cory J. did as well... it's very likely that now, they both are just on the other side of the game, helping out buddies still at the funds with their TV commentary. Same for Tim Seymour.