2017 Investor Roundtable: TSLA Market Action

[Starno]

Anywhere under 1 trillion dollars, Tesla is grossly undervalued.
Between 1 and 2 trillion dollars it is fairly undervalued
Between 2 and 3 trillion dollars it is slightly undervalued
Between 3 and 4 trillion dollars Tesla is fairly priced.

We still have margin before worrying of an overvaluation I think.

 

[neroden]

No, its the whole market.

Oil stocks are down.

Actually, so are bank stocks.

OK, wild theory here. I've seen a change in sentiment in the last few months on the oil-specific news sites -- they were always "oh, this is a cyclical downturn" and now there's more and more "oil is doooomed!". I think that a bunch of big funds finally figured out that oil is an end-stage industry and are rotating out of oil. And if you're a big fund manager, haven't thought too much about it, you're selling lots and lots of oil stocks, and you want to put the cash in something, what's the first thing which comes to your mind?

 

[MitchJi]

rather have a calm short-covering rally which I can sleep through and wake up to permanently higher stock prices, rather than a squeeze where it becomes really important to time the market top.

If the SP goes up by over $150 in a week or probably much more does it really matter if you get out at the exact top?

After reading that Jesse Livermore quote, I don't feel so bad about buying at $24 rather than $17. Which I did feel bad about.
(Can you tell me exactly in what book that quote is?)

As explained in that quote.

There's only so much effect options market makers can have. A big move will outweigh it.

SBenson believes we are clearly in a short-covering rally, where short-sellers continually reduce their position to stay under $10 billion exposure. I think he's probably right.

I believe that the shorts covering is a small percentage of the recent rally.

I don't think anyone can have very much confidence as to just what mix of the following has led to this run into the $380s, most of these items running for months now,

1. - "market" bidding the stock up on anticipation of the Model 3 launch.

2. - some amount of short-covering rally.

I'm very confident that it's about 80% due to number one. I'm hoping to post my reasoning sometime this week.

I can see up to about 10-15% number two.

 

[Waiting4M3]

At a time when TSLA is looking so strong, I want to look at 2 potential worst case scenarios and how the PPS could drop, just to get some perspectives

1) MS fire related drop from Sep to Nov 2013, from $190 to $121, 37% drop
2) MX early production related drop from Dec 2015 to Feb 2016, from $240 to $151, also a 37% drop

I think both these scenarios are pretty close to what worst case can be for the M3. Both times the PPS came back up within 2-3 months. At current level $380, down 37% puts us at ~$240. It would be prudent to invest/trade with this in mind. I'm all-in, but definitely prepared to ride through a dip like that.

 

[geneclean55]

Yellen seems to have pissed off the market right now with her speech.

 

[Jayjs20]

Market went splat. All major tech stocks are in red right now besides Tesla.

 

[LoveTSLA]

Anywhere under 1 trillion dollars, Tesla is grossly undervalued.
Between 1 and 2 trillion dollars it is fairly undervalued
Between 2 and 3 trillion dollars it is slightly undervalued
Between 3 and 4 trillion dollars Tesla is fairly priced.

We still have margin before worrying of an overvaluation I think.

You mean in next 5,10,15,20 years That make me felt that I could not only retire early but will have a luxury life style as well as fund for all my kids' private schools. WOW! I like it.

 

[SteveG3]

At a time when TSLA is looking so strong, I want to look at 2 potential worst case scenarios and how the PPS could drop, just to get some perspectives

1) MS fire related drop from Sep to Nov 2013, from $190-$121, 37% drop
2) MX early production related drop from Dec 2015 to Feb 2016, from $240 to $151, also a 37% drop

I think both these scenarios are pretty close to what worst case can be for the M3. Both times the PPS came back up within 2-3 months. At current level $380, down 37% puts us at ~$240. It would be prudent to invest/trade with this in mind. I'm all-in, but definitely prepared to ride through a dip like that.

~$240 seems about right re Tesla specific events, though, for situations like use of margin where you have to be careful about getting things right big picture, but some poor timing forcing you out, I recommend prepping for such a Tesla specific event overlapping with a general market selloff. So I'd layer on roughly another 33% of downside risk, and at a minimum would want to be able to ride out a temporary drop to $160.

 

[SteveG3]

I believe that the shorts covering is a small percentage of the recent rally.

I'm very confident that it's about 80% due to number one. I'm hoping to post my reasoning sometime this week.

I can see up to about 10-15% number two.

That may be... but, how much of that is investors with conviction, as opposed to investors chasing a stock, or traders making a short term play, either group of which may exit rapidly any time in the next few months? We may feel very confident that the stock is worth at least these prices, but, even if you are correct that this is mostly about the M3, we don't know what if any conviction "Mr. Market" has. Not as dramatic, but the stock peaked in 2012 a month or two before the first MS deliveries in June, only to reach those levels again in 2013.

 

[Waiting4M3]

~$240 seems about right re Tesla specific events, though, for situations like use of margin where you have to be careful about getting things right big picture, but some poor timing forcing you out, I recommend prepping for such a Tesla specific event overlapping with a general market selloff. So I'd layer on roughly another 33% of downside risk, and at a minimum would want to be able to ride out a temporary drop to $160.

The MX drop from end of Dec 2015 to mid Feb 2016 included the effect of the Feb 2016 overall market drop. The additional 33% drop you're preparing for would be equivalent to the 2008 housing bubble drop. It's possible but not likely within the next 1-2 years IMO, but I'm all shares, no options/margin, so I'm ready for that kind of drop too. But we'll see how my stomach holds up if it actually happens.

 

[SteveG3]

The MX drop from end of Dec 2015 right before the unveil, to mid Feb 2016 included the effect of the Feb 2016 overall market drop. The additional 33% drop would be equivalent to the 2008 housing bubble drop. It's possible but not likely within the next 1-2 years IMO, but I'm all shares, no options/margin, so I'm ready for that kind of drop too. But we'll see how my stomach holds up if it actually happens.

Market drops of 20% or more are not at all uncommon. We haven't had one for over 8 years... my understanding is that we have now moved into record territory for time since the last such drop compared tot the last 120 years (not saying this means some mechanical fated drop in the next few months, but, it's very unlikely we won't have at least one 20% drop or worse in the markets before the mid-next decade, a timeframe many of us use with Tesla). Drops of 30%, 40%, 50+% happen (wasn't the '08 drop more than 33%?). Tesla being a stock that has soared, would likely drop more than the market if we get to something in the 20+% range for the market. While I'm highly confident all of this would be temporary, that would be of little help to someone forced out of their position with a margin call.

 

[erthquake]

Yellen seems to have pissed off the market right now with her speech.

It might be more about the doubt whether she'll be reappointed by Trump. Any uncertainty about who Trump might or might not appoint at Fed Chair will not be appreciated investors. "Stay tuned!"

 

[geneclean55]

Hawkish position... market don't like it

 

[geneclean55]

TSLA hanging in there like a champ

 

[Starno]

240 won't happen unless catastrophic macro or M3 launch events.
Post MS and MX dip happened because Tesla profitability was still a long way off...
Now it's right at the corner.

MS and MX are like the ipod for Apple. M3 is the iphone basically.

 

[neroden]

If the SP goes up by over $150 in a week or probably much more does it really matter if you get out at the exact top?

Not the exact top. But look at the OTCMKTS:VLKAY chart.

It makes a huge difference to sell at $75 rather than *$20* which is what it fell back to after the squeeze.

In a true short squeeze, the stock gets temporarily massively overvalued, and you can make a bundle by selling at the top and buying back later. And I'm not sure I know what is "overvalued" for TSLA right now. I'm much more comfortable with a sustainable rally.

That said this looks like a sustainable rally to me.

Hypothetical: if Tencent announced a 10% stake, Baidu announced a 5% stake, Alibaba announced a 5% stake, and Fidelity announced a 20% stake (up from their current 15%) all at once, meaning that 20% of the shares outstanding had gone off the market before the short-sellers noticed, then we might see short-sellers panicking about inability to cover and get a true squeeze.

I believe that the shorts covering is a small percentage of the recent rally.

I'm very confident that it's about 80% due to number one. [long antipication of model 3] I'm hoping to post my reasoning sometime this week.

I can see up to about 10-15% number two [short covering].

You're probably right.

 

[Starno]

I guess there is a lot of buy orders limit being executed at those levels which hold the stock a bit.

 

[madodel]

Anywhere under 1 trillion dollars, Tesla is grossly undervalued.
Between 1 and 2 trillion dollars it is fairly undervalued
Between 2 and 3 trillion dollars it is slightly undervalued
Between 3 and 4 trillion dollars Tesla is fairly priced.

We still have margin before worrying of an overvaluation I think.

This isn't some sort of subversive poetry is it? Just trying to figure out why we dipped below $380.

 

[Reciprocity]

Not the exact top. But look at the OTCMKTS:VLKAY chart.

It makes a huge difference to sell at $75 rather than *$20* which is what it fell back to after the squeeze.

In a true short squeeze, the stock gets temporarily massively overvalued, and you can make a bundle by selling at the top and buying back later. And I'm not sure I know what is "overvalued" for TSLA right now. I'm much more comfortable with a sustainable rally.

That said this looks like a sustainable rally to me.

Hypothetical: if Tencent announced a 10% stake, Baidu announced a 5% stake, Alibaba announced a 5% stake, and Fidelity announced a 20% stake (up from their current 15%) all at once, meaning that 20% of the shares outstanding had gone off the market before the short-sellers noticed, then we might see short-sellers panicking about inability to cover and get a true squeeze.


You're probably right.

With the last squeeze in 2013, if that was a squeeze, it took about 4 months before it dropped for a couple of months then backup for 4 more months or so. Was that a squeeze or just a regular run up? the stock went from 40 to 240 in that 8-9 month time period.

 

[neroden]

With the last squeeze in 2013, if that was a squeeze, it took about 4 months before it dropped for a couple of months then backup for 4 more months or so. Was that a squeeze or just a regular run up? the stock went from 40 to 240 in that 8-9 month time period.

I don't consider that a squeeze; I've previously stated that the 2013 runup was a rally which was partly a short-covering rally, but not a true VW-style squeeze.