2017 Investor Roundtable: TSLA Market Action

[jhm]

 

[GoTslaGo]

I've been reading some of the posts on the AP2.0 thread. Sounds like it is still not to parity with AP1, now 8+ months after release. It is way behind schedule. There has to be serious doubt about Musk's timeline for FSD in just 5 months. Hopefully, AP2 will be better than AP1 by then, but ready for a FSD coast to coast trip???? I'm not going to bet on that.

Model S: AP1 (17.26.17) I find great and predictable. Handles highways really well. Lane changes are smooth (albeit can be slow). TACC/Autosteer work great. I do not use it for non-highway driving.

Model X: AP2 (17.26.76) I find buggy. Handles highways well, but does more "emergency slowing"--it feels that way, whether for overhead bridges or for other cars. Also seems to pick up adjacent cars for speed control and TACC when on full AP. A bit squirrelly on open straight-always (My guess: I think it's learning to process two cameras). On TACC itself, it behaves as I would expect. Lane changes are faster, but less smooth and jerky--essentially two step lane changes. Also the lane changes are buggy, more failures with this update. I do not use for non-highway driving. Previous iteration (I think 17.17.4, was more akin to AP1, IMHO).

We just got a new update for the X: 2017.28 c528869. Will try this afternoon a bit (gotta get the kids). Probably try it more tomorrow. Interesting the nomenclature is so different. Karpathy's first iteration?

Edit:

New update feels better. Less squirrelly in lane. Smoother lane changes. Will need to drive more, but it's already better on the highways.

 

[Alketi]

We just got a new update for the X: 2017.28 c528869. Will try this afternoon a bit (gotta get the kids). Probably try it more tomorrow. Interesting the nomenclature is so different. Karpathy's first iteration?

Let us know your observations. Electrek just wrote about his update, quoting from other users here. I won't tell you the results to not spoil the experiment.

 

[bdy0627]

Great post, and well with, I certainly agree.

Trying to predict how the stock will move based on these excitations kind of comes down to wether the market cares more about scary EPS or exciting (hopefully) production and sales volumes. I'm thinking this means a pretty general slow downward trend until delivery numbers, followed by 5% or so sell offs after earnings as algos and sheep traders overreact to fully expected but negative EPS numbers. Perhaps selling OTM calls would be a good strategy over the next few months ( starting after the 28th of course).
This reminds me of the DTU strategy this board came to like last year which worked out very nicely for many of us.

Any thoughts on these musings or possible strategies to play the next few months with short term trades?

I'm curious about the DTU strategy. What is that?

 

[AlMc]

I'm curious about the DTU strategy. What is that?

Down Then Up. There was sentiment that the SP would drop some (then obviously time to buy), Then the SP would go Up, making TMCers loads of $.

IIRC the timing given by the person who detailed the strategy was a bit off, and I do not think that person was around to see the SCTY purchase which caused the down.

 

[GoTslaGo]

Let us know your observations. Electrek just wrote about his update, quoting from other users here. I won't tell you the results to not spoil the experiment.

Just added it as an edit, but realized others may not see the edit:

I think from my brief drive it's already better on the highway. Keeping in lane is much less squirrelly (first thing I noticed) and the lane change is fast and much better and smoother. Looking very promising. Will have to do more "testing" later...

 

[22522]

I appreciate yours and everyone else's commentary. I just can't help wonder if we might be giving shorts too much credit. Are they really trying to drive the stock down in such a coordinated effort? @Curt Renz 's video
Seems like they would run out of capital.

If you can trigger a robot to sell (programmed stop losses are one such robot), this method generates capital. Listen carefully when he says "Take advantage of the other side" or something like that.

1. Sell enough to trigger an avalanche.
2. Buy just after the bottom.
3. Sell near the top on the rebound.

It is like a pump that prints money. The money is taken from weak holders (people with stop losses that robots control) and given to manipulators. The weak holders have to pay more to recover their positions.

 

[Irishjugg]

Down Then Up. There was sentiment that the SP would drop some (then obviously time to buy), Then the SP would go Up, making TMCers loads of $.

IIRC the timing given by the person who detailed the strategy was a bit off, and I do not think that person was around to see the SCTY purchase which caused the down.

Yep, this was a situation where, at the time, model 3 was unveied, preorders were huge but Musk basically said they wouldn't update the number anymore. Production/sales guidance was basically for 25k/ quarter and until model 3 it wasn't planned to increase at all. We had just finished the last "free" quarter before model 3 and gigafactory spending as well as opex and sg&a spending to get ready for model 3 would be ramping up, and sick was somewhere around 250 - not ATH but in the ballpark.

The thinking was that, basically, nothing that the uninformed market would consider good was going to happen anytime soon and pretty much any news would actually look kind of bad. Basically we expected the stock to go down for a while before a strong return to moving up when it was getting close to positive model 3 news and other positive things.

The down happened pretty much to plan, the up happened too, just a few months later than our guesses. I personally remember replying to some person about how "no I can't GUARANTEE that the price will be higher, but that I basically could, and that barring Elon dying or a similar level of disaster I would be absolutely shocked if my bet wasnt well in the money in 6 months. He called me out 6 months later for being down a few percent but the weeks later it was like a 60% gain or something like that, so the timing was close.

I see a lot of parallels to right now, however unless model 3 production gets delayed heavily I don't think the price will drop very far. (I do expect model 3 ramp to be behind schedule, just not terribly. Call it 1500/week in December worst case instead of 5k at plan)

I'm looking for some of our excellent members thoughts on things. I think unchanged to slightly down, then up back to the 380-400 range is more likely that the down big then up bigger that we expected then.

If TSLA shows EPS profit in Q118 or something I expect much higher than 400, barring macro trouble

 

[Yuri_G]

Let us know your observations. Electrek just wrote about his update, quoting from other users here. I won't tell you the results to not spoil the experiment.

It's difficult to separate the signal from the noise with the Autopilot update threads. People that have issues are far more likely to complain than people posting about having a smooth experience. It helps to watch Youtube videos where people drive the same route with each update and as far as I can tell the general trend has been positive.

 

[bdy0627]

Yep, this was a situation where, at the time, model 3 was unveied, preorders were huge but Musk basically said they wouldn't update the number anymore. Production/sales guidance was basically for 25k/ quarter and until model 3 it wasn't planned to increase at all. We had just finished the last "free" quarter before model 3 and gigafactory spending as well as opex and sg&a spending to get ready for model 3 would be ramping up, and sick was somewhere around 250 - not ATH but in the ballpark.

The thinking was that, basically, nothing that the uninformed market would consider good was going to happen anytime soon and pretty much any news would actually look kind of bad. Basically we expected the stock to go down for a while before a strong return to moving up when it was getting close to positive model 3 news and other positive things.

The down happened pretty much to plan, the up happened too, just a few months later than our guesses. I personally remember replying to some person about how "no I can't GUARANTEE that the price will be higher, but that I basically could, and that barring Elon dying or a similar level of disaster I would be absolutely shocked if my bet wasnt well in the money in 6 months. He called me out 6 months later for being down a few percent but the weeks later it was like a 60% gain or something like that, so the timing was close.

I see a lot of parallels to right now, however unless model 3 production gets delayed heavily I don't think the price will drop very far. (I do expect model 3 ramp to be behind schedule, just not terribly. Call it 1500/week in December worst case instead of 5k at plan)

I'm looking for some of our excellent members thoughts on things. I think unchanged to slightly down, then up back to the 380-400 range is more likely that the down big then up bigger that we expected then.

If TSLA shows EPS profit in Q118 or something I expect much higher than 400, barring macro trouble

Thanks for your perspective on this. I tend to pretty much agree. The stock will be somewhat higher and somewhat lower between now and the next ER that shows EPS profit, which is most likely 1Q 2018. The ramp needs to be ahead of projections, I think, to show a profit in 4Q. It's possible it could slip to 2Q 2018 but anything later than that would be a big negative surprise. Tesla is essentially preparing the market for the M3 ramp to really go vertical in Dec or Jan, and once that happens, their margins will become quite positive on M3. So, the market should be expecting this but it's not because of Tesla's history. The market also isn't sure that Tesla can in fact get to a point where margins are positive. These negative biases work hugely in our favor as investors who have done our DD.

It sure would be nice to profitably trade the volatility of the next 6 months. The risk is what I think happened to some during this latest run up from $180. Tesla had been in a trading range for so long that many just expected the stock to come back down from somewhere near the ATH at that point ~ $270ish. As a result, a number of investors took their foot off the pedal and deleveraged way early during the run up. The same thing could easily happen again over the next 6 months when $380 seems like it could be the top of the trading range for a while. For me, I think the answer is to keep a core of shares and DITM LEAPs at strikes I'm comfortable holding through drops and rises. On top of that, I will try to buy low and sell high with a smaller portion of ATM LEAPs. I would really hate to miss out on being able to add more leverage with a dip near $300 or below, should it happen. If it does, I'll sell shares and buy LEAPs. That's my current plan. I'm interested in hearing thoughts from others for the next 6 months. Thanks

 

[Bet TSLA]

Considering all this I am inclined to not carry any leverage at all for the next several quarters.

I've been heavily leveraged long TSLA (almost exclusively by writing in the money puts) since the beginning of the year. I don't see any reason to change my strategy, as the value of my TSLA portfolio is now 2.5 times what I started with. Temporary dips (like now) are just a buying opportunity.

 

[geneclean55]

Goldman Sachs is getting slammed for miscalculating growth during the first 2 quarters. Discussion is mainly around commodities, but I am sure during closed door meetings, the likes of Tamberinno are experiencing discomfort. Citigroup just initiated bullish coverage of TSLA. Adam Jonas is going to have to re-appraise if Tesla surpasses his low ball estimates for 2017.
I agree that Tesla will have some ugly looking financial quarters coming up. But remember how much TSLA was affected when GS switched from a bullish analyst to a bearish analyst. The same can happen in reverse, and it may not wait until Q12018 earnings for that to happen.

 

[EinSV]

Thanks for your perspective on this. I tend to pretty much agree. The stock will be somewhat higher and somewhat lower between now and the next ER that shows EPS profit, which is most likely 1Q 2018. The ramp needs to be ahead of projections, I think, to show a profit in 4Q. It's possible it could slip to 2Q 2018 but anything later than that would be a big negative surprise. Tesla is essentially preparing the market for the M3 ramp to really go vertical in Dec or Jan, and once that happens, their margins will become quite positive on M3. So, the market should be expecting this but it's not because of Tesla's history. The market also isn't sure that Tesla can in fact get to a point where margins are positive. These negative biases work hugely in our favor as investors who have done our DD.

It sure would be nice to profitably trade the volatility of the next 6 months. The risk is what I think happened to some during this latest run up from $180. Tesla had been in a trading range for so long that many just expected the stock to come back down from somewhere near the ATH at that point ~ $270ish. As a result, a number of investors took their foot off the pedal and deleveraged way early during the run up. The same thing could easily happen again over the next 6 months when $380 seems like it could be the top of the trading range for a while. For me, I think the answer is to keep a core of shares and DITM LEAPs at strikes I'm comfortable holding through drops and rises. On top of that, I will try to buy low and sell high with a smaller portion of ATM LEAPs. I would really hate to miss out on being able to add more leverage with a dip near $300 or below, should it happen. If it does, I'll sell shares and buy LEAPs. That's my current plan. I'm interested in hearing thoughts from others for the next 6 months. Thanks

I have a slightly different perspective and strategy, most of which was put in place last year. I believe there is a reasonable chance of a 10-20X increase over the next 10 years if Tesla executes on its announced products. I also believe it is fairly likely that a significant amount of this potential will be clear between now and 2020, with the introduction and maturation of Model 3, TE and Solar Roof, introduction of Tesla Semi and Model Y, Roadster, Pickup and perhaps even Tesla Network. This could lead to a 3-5X runup in that timeframe. I don't believe the SP increases are necessarily dependent on a positive EPS (we have already had a large increase this year w/o it) although obviously positive earnings would be a major plus. IMO there are just too many moving parts right now to play games with trying to time the market -- Model 3 reveal, Semi announcement, TE ramp, Model 3 ramp, ultrafast charging, FSD differentiation, Solar Roof ramp etc.

At the same time, there are major short-term execution risks with Model 3, a likely need for capital to build GFs and a macro environment that IMO is overdue for a downturn with inflated asset prices everywhere. I am positioned to weather a potential downturn, but take advantage of the upside potential with modest leverage.

 

[GoTslaGo]

Goldman sachs is getting slammed for miscalculating growth during the first 2 quarters. Discussion is mainly around commodities, but I am sure during closed door meetings, the likes of Tamberinno are experiencing discomfort. Citigroup just initiated bullish coverage of TSLA. Adam Jonas is going to have to re-appraise if Tesla surpasses his low ball estimates for 2017.
I agree that Tesla will have some ugly looking financial quarters coming up. But remember how much TSLA was affected when GS switched from a bullish analyst to a bearish analyst. The same can happen in reverse, and it may not wait until Q12018 earnings for that to happen.

2nd quarter of losing out to MS in the bond market too:

Wall Street has a new trading king as Morgan Stanley dethrones Goldman

Midas has left the building?

 

[TradingInvest]

2nd quarter of losing out to MS in the bond market too:

Wall Street has a new trading king as Morgan Stanley dethrones Goldman

Midas has left the building?

Seeing how desperate GS tried to push TSLA lower, I guess GS lost quite a bit on the wrong TSLA bet.

 

[Off Shore]

...I just can't help wonder if we might be giving shorts too much credit. Are they really trying to drive the stock down in such a coordinated effort? @Curt Renz 's video on how hedge funds can manipulate the SP is compelling, but I can't help but be a bit skeptical that day in and day out the shorts are constantly doing this. Seems like they would run out of capital...

Charles and David still have plenty of capital, and plenty of reason to depress Tesla's stock price.

 

[Tslynk67]

Charles and David still have plenty of capital, and plenty of reason to depress Tesla's stock price.

I'm sure they do, but at the end of the day will keeping $TSLA low actually impact anything, other than pissing-off TMC members? Will it retard the development of EV's, will it lead to an Indian summer for fossil fuels?

I think not.

 

[bdy0627]

I have a slightly different perspective and strategy, most of which was put in place last year. I believe there is a reasonable chance of a 10-20X increase over the next 10 years if Tesla executes on its announced products. I also believe it is fairly likely that a significant amount of this potential will be clear between now and 2020, with the introduction and maturation of Model 3, TE and Solar Roof, introduction of Tesla Semi and Model Y, Roadster, Pickup and perhaps even Tesla Network. This could lead to a 3-5X runup in that timeframe. I don't believe the SP increases are necessarily dependent on a positive EPS (we have already had a large increase this year w/o it) although obviously positive earnings would be a major plus. IMO there are just too many moving parts right now to play games with trying to time the market -- Model 3 reveal, Semi announcement, TE ramp, Model 3 ramp, ultrafast charging, FSD differentiation, Solar Roof ramp etc.

At the same time, there are major short-term execution risks with Model 3, a likely need for capital to build GFs and a macro environment that IMO is overdue for a downturn with inflated asset prices everywhere. I am positioned to weather a potential downturn, but take advantage of the upside potential with modest leverage.

Good points. So you are buy and hold with some leverage, along with resources to add leverage on a dip. Predicting all of this short term movement is truly impossible as we have seen, so buy and hold, at least for the majority of the investment, is the most predictable way to invest. Thanks

 

[bdy0627]

How much effect will max pain have today?

 

[MitchJi]

I'm looking for some of our excellent members thoughts on things. I think unchanged to slightly down, then up back to the 380-400 range is more likely that the down big then up bigger that we expected then.

If TSLA shows EPS profit in Q118 or something I expect much higher than 400, barring macro trouble

I think that going up between now and early August to $380-$410, followed by another dip to about $330. Then about $460 in February or March.

Definitely not an advice!