2017 Investor Roundtable: TSLA Market Action

[erha]

Somebody is probably going to ask Elon about the stock price today. I think he is going to say that the stock price is high, but not considering where it might go in the next couple of years.

 

[DragonWatch]

Same-O; caution is always a good word, but long horn bull I remain.

 

[TheTalkingMule]

Cracking tree-fitty!

 

[winfield100]

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.

for a snapshot of whom "anton" is, look here, responses 1445, and 1452
Articles re Tesla—Fact or Fiction?
also remember, the words slander were thrown at me at least 3x by same person on SA on 2 diff occasions, whom is short long dated put options, but no names......

 

[dennis]

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.

But the people on the other side of this sentiment believe they see plenty that is going wrong and claim it will be fatal. I don't spend much time reading/commenting on SA but I had a 3 hour layover yesterday. This was in response to a bear article about AAA raising insurance premiums on Tesla cars:

The latest in a long line of SA articles I have read over the past 3 years that purport to have found the Achilles Heel that will cause Tesla sales to dwindle, its stock to tank and drive it into bankruptcy. Here's an incomplete list:

1) high insurance costs
2) AP2 caused accidents
3) AP1 caused accidents
4) warranty costs
5) Underestimated RVGs
6) Tesla killers from Chevy, Nissan, Jaguar, BMW, Audi, Mercedes, Volvo, Apple, Google, Faraday Future, Lucid, BYD
7) Slow GigaFactory buildout
8) Solar City acquisition
9) Executive departures
10) Musk is spread too thin
11) Stuffing the channel in China
12) Loss of subsidies in Denmark
13) Reduced subsidies in Norway
14) Looming reduced subsidies in US
15) Battery fires
16) Lack of growth in Model S orders
17) Model X production problems
18) Falcon Wing doors
19) Lack of growth in Model X orders
20) Worker injuries in Fremont
21) Union organizing in Fremont and Germany
22) Inability to get needed capital
23) Negative gross margin on Model 3
24) limited demand for BEVs
25) No $35K Model 3 possible
26) Model 3 reservation cancellations
27) whompy wheels
28) etc.

In the face of all of this Tesla continues to grow >50% per year, introduce new products, raise necessary capital, and frustrate the bears. They can't understand how a company with so many seemingly fatal flaws isn't facing imminent bankruptcy.

Here's my explanation FWIW. Tesla is building products that delight most customers. They present an innovative and positive view of the future. By remaining true to their mission Tesla has created a very strong brand. It is aspirational, meaning consumers want to be a part of it, especially younger consumers.

When Tesla has faced problems like battery fires and Model X production issues it attacks them head on rather than trying to ignore them like GM did with the ignition switches. This aids in keeping issues from becoming fatal flaws. That includes higher insurance premiums which Tesla has already started to partially address with a large planned increase in certified or Tesla owned body repair shops.

I predict that Tesla's great products, brand, innovation and execution will continue to give it time to face any current and future issues. And continue to frustrate the Tesla shorts.

 

[anticitizen13.7]

I wonder if this is always the same person or if someone is sending out quotes to post.

I see them often saying "Vehicle is mostly hype and cache", when they want to say "Vehicle is mostly hype and cachet"

Cache = a hiding place especially for concealing and preserving provisions
Cachet = the state of being respected or admired; prestige.

Just seems odd that I keep seeing that same error so frequently

I think of L2 and L3 caches in CPUs every time I read that mistake, haha.

 

[ValueAnalyst]

View attachment 230031

Given the love everyone here feels for Elon Musk, I recommend that we all go commando today.

I just did.

 

[theschnell]

I'm buying short term OTM puts here just out of disbelief. Not touching my shares though. I will do the same for Q2 earnings. The nice thing about hedging with puts is that you're not giving the shorts any of your shares or missing out on further gains. The only downside is that they only provide short term protection and I am potentially throwing good money away, but it helps me feel better about my extremely large TSLA position to have puts during potentially tumultuous events.

Edit: I expect nothing positive or negative to come out of shareholder meeting. Just another dud of a meeting like the last several years. But if price is moving up in expectation of something being announced at meeting, it will move back down afterwards if nothing spectacular is announced.

 

[ValueAnalyst]

I'm buying short term OTM puts here just out of disbelief. Not touching my shares though. I will do the same for Q2 earnings. The nice thing about hedging with puts is that you're not giving the shorts any of your shares or missing out on further gains. The only downside is that they only provide short term protection and I am potentially throwing good money away, but it helps me feel better about my extremely large TSLA position to have puts during potentially tumultuous events.

Edit: I expect nothing positive or negative to come out of shareholder meeting. Just another dud of a meeting like the last several years. But if price is moving up in expectation of something being announced at meeting, it will move back down afterwards if nothing spectacular is announced.

The price is moving up because it's very undervalued.

I don't know of any credible bull that expects anything earth-shattering at today's annual meeting.

 

[Reciprocity]

Im no chartist, but that chart looks like its doing a SpaceX impersonation again.

 

[DurandalAI]

To the tune of "The heat is on"
"The squeeze is... on!"
'Cause the squeeze is on

 

[anon]

While I don't expect any unexpected news today, I think simply re-iterating that Model 3 is still on track for July is significant news at this point.

 

[Waiting4M3]

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.

For example lets say the deepest oil pocket, the Saudis are shorting Tesla. Their central bank now has a net foreign asset of $500B, down from over $700B in 2014. Their 2016 deficit was ~$80-100B depend on accounting method. Some analyst thinks they have wiggle room down to $350B. So if they're shorting Tesla, losing a few $B is probably fine, getting upward of $10B would be a significant portion of their cash pile, not sure if they would risk that if it keeps growing.

 

[madodel]

Ding! ATH

Maybe setting new ATH's could get boring, but Elon's even made Boring cool now.

Are you tired of winning already?

 

[Paracelsus]

While I don't expect any unexpected news today, I think simply re-iterating that Model 3 is still on track for July is significant news at this point.

Agreed............and still hoping for even just a whisper of news regarding solidification of even just one of the proposed new Gigafactories. That would put TSLA into orbit IMHO

 

[Gerasimental]

Lots of tiny pops. Like walking on bubble-wrap.

 

[ValueAnalyst]

For example lets say the deepest oil pocket, the Saudis are shorting Tesla. Their central bank now has a net foreign asset of $500B, down from over $700B in 2014. Their 2016 deficit was ~$80-100B depend on accounting method. Some analyst thinks they have wiggle room down to $350B. So if they're shorting Tesla, losing a few $B is probably fine, getting upward of $10B would be a significant portion of their cash pile, not sure if they would risk that if it keeps growing.

Saudis shorting any stock, let alone Tesla, is an extremely unlikely scenario. Shorting is an extremely rare strategy in the whole asset management industry. I've never heard of any sovereign fund shorting a specific company. I understand the stakes are very very high, but that alone doesn't mean shorting TSLA is the way to go for the special interests feeling the heat.

I can see FUD being spread by special interests though. I'm not disputing that.

 

[madodel]

For example lets say the deepest oil pocket, the Saudis are shorting Tesla. Their central bank now has a net foreign asset of $500B, down from over $700B in 2014. Their 2016 deficit was ~$80-100B depend on accounting method. Some analyst thinks they have wiggle room down to $350B. So if they're shorting Tesla, losing a few $B is probably fine, getting upward of $10B would be a significant portion of their cash pile, not sure if they would risk that if it keeps growing.

I believe the Sauds are very aware of the future value of their straded assets. I'm surprised they aren't 5%+ investors in TSLA. Aren't they heavily investing in renewable projects in the kingdom of late?

 

[Waiting4M3]

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.

In this scenario of big oil money trying to slow down or stop Tesla, once Tesla achieves profitability and the M3 allows them to self-finance future GGF build-out, I that would be achieving "escape velocity", and the "stopping Tesla" goal will be completely impossible, the best that the big oil money can hope for at that point is slowing down Tesla. I suspect that should lead to some change in their conviction, and we should see some shorts covering.

 

[erha]

I'm finishing up my master thesis these days. Just went to the kitchen to get a cup of coffee. When I came back to the computer, my Tesla portfolio had increased more than my monthly scholarship...

I hope everybody is enjoying these days as much as I am!