2017 Investor Roundtable: TSLA Market Action

[elasalle]

Even if there is a rotation out of tech sector .. We gotta remember Tesla is in Automative, Tech and Energy sector.
Also, even if macros are dinged for a bit we got to remember that M3 launch is just around the corner (even if we assume July 31st .. it's still 50 days away)

Still if drop continues, might be best to sell Jan 18's and earlier and load up on Jan 19.. (at least thats my plan) and leave the common stocks alone.

Coming Wed, seems there might be a Fed rate hike or more info on that.
Until market knows what tax overhaul is it is still in upward trend .. and overhaul news will come in Fall at the earliest .. since they gonna retry for the health care stuff first

 

[bdy0627]

Let's go back in time to December and the stock had just risen to $202.00. You decide to wait for a dip. The next dip happens in March where it dips to 243. If you buy at that point, you have just lost $40.00 per share from not buying in back in December.

I think if you are older and have a high net worth and there is a Tesla-like opportunity you just go "all in" immediately at whatever amount you are comfortable with and hold for a longish period.

If you are young and still contributing it seems wisest to just dollar-cost average in as you go.

This is a really good lesson to keep in mind for investors. It's the same reason you don't wait to sell a stock that is declining to see if it will go up a little so you can sell at a higher price. Once you have decided you want to own or sell the stock, best to act. For a long term investor, these small moves will not even show up on the long term TSLA chart. But, if it makes you feel better you could use 50% to purchase at the moment and then 50% after the stock moves a bit. There's a chance it may drop and you will then feel better that you waited. If it goes up, you would feel better that you got in with 50% at a lower price. Once you are in, it's easier to wait for dips to purchase more. At least in theory. I'm guilty of adding more shares in the last few weeks rather than waiting for a dip too!

 

[Starno]

This is a really good lesson to keep in mind for investors. It's the same reason you don't wait to sell a stock that is declining to see if it will go up a little so you can sell at a higher price. Once you have decided you want to own or sell the stock, best to act. For a long term investor, these small moves will not even show up on the long term TSLA chart. But, if it makes you feel better you could use 50% to purchase at the moment and then 50% after the stock moves a bit. There's a chance it may drop and you will then feel better that you waited. If it goes up, you would feel better that you got in with 50% at a lower price. Once you are in, it's easier to wait for dips to purchase more. At least in theory. I'm guilty of adding more shares in the last few weeks rather than waiting for a dip too!

I'm personally always buying. Everytime I have fresh capital incoming I buy more stock.
It doesn't mean I don't keep cash to buy in case of a dip, but I ain't waiting for one.

 

[TradingInvest]

I'm personally always buying. Everytime I have fresh capital incoming I buy more stock.
It doesn't mean I don't keep cash to buy in case of a dip, but I ain't waiting for one.

Tesla is a rare case. Keep adding with free cash is a good approach.

 

[TradingInvest]

I am normally very good about not trying to time the market. However, after reading in this forum I got so excited thinking we were in the middle of a short squeeze. I went ahead and sold one fund to buy more tesla stock. Instead of waiting till Monday for the money to clear, I actually called the broker and got them to process it Friday (20% of my net worth) right at the peak of $375 only to have it drop by $20 per share three hours later.

I really learned my lesson. Normally I would dollar average in over a few days if making a new investment. Back to my old habits. Definitely in for the long run at 50% of my net worth.

Do you have a good idea what really happened on Friday? If not, you have not fully learned your lesson yet. Similar situations may come hurt you again down the road or on another stock. People assume the market makes random moves, or moving based on news. The market/stocks can be manipulated and often they are manipulated. Learn to protect yourself and go against the manipulators.

 

[geneclean55]

Do you have a good idea what really happened on Friday? If not, you have not fully learned your lesson yet. Similar situations may come hurt you again down the road or on another stock. People assume the market makes random moves, or moving based on news. The market/stocks can be manipulated and often they are manipulated. Learn to protect yourself and go against the manipulators.

Strikes me, that with monthlies coming up next week , MM were gonna get their clocks cleaned without a fortuitous pull-back.

 

[MitchJi]

Fear Gauge Flashed Extreme Bullishness Just Before Tech Selloff
Fear Gauge Flashed Extreme Bullishness Just Before Tech Selloff
6/09/2017

The CBOE Volatility Index, the market's fear gauge, tumbled to its lowest level since 1993 on Friday, triggering a big sell-off in leading tech stocks.

The Volatility Index estimates expected volatility based on S&P 500 option prices. Commonly known by its ticker, the VIX highlights intense fear or complacency in the market. Low VIX readings are a sign that investors are especially bullish. Excessively bullish readings are often marked by at least short-term market tops.

The VIX fell to 9.37 intraday, quickly followed by an abrupt and powerful selloff in the Nasdaq and leading tech stocks. Apple (AAPL), a Dow industrials component, fell 3.9%, closing just above its 50-day moving average after sinking as low as 146.02. Facebook (FB), Amazon.com (AMZN), Netflix (NFLX) and Google parent Alphabet (GOOGL) are all down more than 3% while Nvidia (NVDA) has lost 6.5%.

The VIX has rebounded for a double-digit percentage gain in afternoon action before closing up 5.6% to 10.73.

 

[MitchJi]

Still if drop continues, might be best to sell Jan 18's and earlier and load up on Jan 19.. (at least thats my plan) and leave the common stocks alone.

You realize that if you keep the Jan 18's and earlier you could be wiped out by any of 100's of things that could delay the M3 launch by 3-4 months?

 

[SBenson]

This is curious. What is the intuition behind this? Why multiply growth times 100? Why not another constant?

Thanks.

The pattern I noticed is

Operating CashFlow * Growth = Market Cap

Here are all the qualifiers
- Operating Cash Flow is trailing 12 Months (T12)
- Growth is measured in revenue. It is also T12. So it is T12 Revenue over the Prior-T12. It is essentially annual growth measured with latest 4 quarters over the 4 quarters before the latest 4.
- Growth percentage is converted to numeric.

So for example company XYZ has T12 Operating Cashflow of 2Bil and has revenue growth of 30%. The market cap would be ~60 Bil.

This works only for companies that have stabilized their business model. Generally that coincides with consistent positive free-cash-flow but not necessarily. For Tesla the business model should stabilize with volume Model-3 production even though free-cash-flow may not reach positive due to large capex planned for next round of gigafactories… In any case, Q4 maybe too early. Maybe we need at least Q1 to see how operating cashflow is evolving.

One other big caveat, I noticed this pattern play out for past few years, where S&P is more or less fully valued and tech is hot. In bearish markets, the equation may not hold at all.

In any case I was kind of backing from 100Bil market cap to see what sort of Operating CashFlow we need and the answer is 2Bil as growth is assumed at 50%. That’s the only significance of 100. I was just treating 100 as a milestone and trying to asses when Tesla will reach it. So in turn I was trying to see when Tesla will reach 2Bil Operating Cashflow over T12 month period.

The other big dynamic is short covering. If there are early indications of healthy model-3 ramp, shorts may continue to panic. That can accelerate the valuation.

 

[elasalle]

You realize that if you keep the Jan 18's and earlier you could be wiped out by any of 100's of things that could delay the M3 launch by 3-4 months?

Yes, hence larger percent in 19's, but still have some 18's .. but need to definitely tread carefully.

 

[Starno]

Alright so right now we're about 12% away from 400.
If we want to break it next week, it will take :
2,5% increase everyday until friday.
3% increase everyday until thursday.
_____

The scenario that I think has potential to play out is a little rally on monday, something like 4% on monday taking the stock to around 372.
Tuesday an other 3% with a close around 383. Wednesday 2,8% taking the stock around 393.

Then I can see either a little resistance around 390-395 that can last until next monday. Or big breakthrough, and we finish the week over 405.

Alright guys forget it, sector shift definitely happening. Tesla doesn't seem to be saved from it. A few depressed days might be expected.

 

[SBenson]

Updated Table

Couple of notes
- This is NOT S3 data
- I find S3 data to be very noisy. Really hard to look for patterns in it. But overall trends over multiple weeks match.

Bottomline: My theory that shorts are maxed out at ~$10Bil is still in tact.

 

[SBenson]

My thinking is the stock will open lower and gradually drift higher today.

Wish there's a crystal ball but let's see what happens.

 

[TrendTrader007]

My parting words as I go on a 8 day vacation:
I'm always amazed how fast nervous nellies and worrisome nancies come out of the woodworks exhorting extreme caution and words of wisdom based on day to day stock market movements. For these soothsayers the next crash is always around the corner. Most of these prophets of doom and gloom will never help you get super rich, at least not through the stock market, though they will definitely make you a wiser investor.
I stay superlong and super leveraged TSLA
Keeping all my J2018 as well as J 2019 calls as well
Not that I'm buying anymore
I got done with my last buying when SP was at $342 or so
My average cost basis is in $240s somewhere or closer to $250 I think
I hold just over 31000 shares of TSLA and over 283 calls with about 40% of those J 2018s rest J 2019s
I believe it's totally wrong to deleverage at this time just when TSLA is about to make a huge move up over the next 3 to 6 months
I'm willing to take short term losses but reducing my margin or selling any of my J 18 calls is not anything that I'm even remotely considering
but that's just my opinion and I could be wrong
Goodluck!

 

[bdy0627]

Opening lower for the tech stocks looks likely. TSLA is currently down 4.88 but that is up from 6.4 earlier. The drop in premarket appears to be lessening.

 

[bdy0627]

Strong support level for TSLA at 325 if there is a big selloff. It would make sense to buy that dip.

 

[elasalle]

Seems pre-market jitters subsided and back to previous days close. No hard decisions needed if price continues to move up

 

[geneclean55]

Quite the come-back pre-market.... and on huge pre-market volume.
Covering maybe?

 

[Jayjs20]

Other tech stock still negative. If I had to guess, small chance some news is coming that insides got to early. Or maybe it'll crash back down once the market opens, who knows.

 

[FluxCap]

Quite the come-back pre-market.... and on huge pre-market volume.
Covering maybe?

Possibly movement given this morning's AJ note making the rounds, though I think it could be interpreted as bullish or bearish.