2017 Investor Roundtable: TSLA Market Action

[austinEV]

Thanks. I stand corrected. Any other times? Bueller, Bueller?

I don't think there were. Product announcements have historically been snoozes. We enthusiasts get all excited but the market doesn't care unless it translates to dollars. In fact, if you really zoom out, news of any kind has averaged negative. Tesla goes up on boring days. Today is a banner example.

 

[Irishjugg]

Here is my Bearish/Bullish short term prediction. I really don't like the double whammy setup for the M3 reveal and Q2 ER. I think we see some runup in the first half of this week due to enthusiasm (easy call since it is already happening) then some softening, then some retraction Thu/Friday.

Friday, July 28 (presumable at night) there will be the M3 handover party. My prediction: The most boring possible prediction on these forums, which is he delivers 30 cars, the range is in line with expectations (220 or so?) some final specs on acceleration or something. Basically they will demystify a few things that we already basically knew. No new features. They will just be proud of the car being out and leave it at that. The only thing I see them maybe doing is an update on reservation numbers if it is good, purely because that was the surprise thing they did last March during the initial unveiling, so there is a real precedent. Summary: exactly what they said would happen, no drama, no magic rabbits out of a hat.

Then, over the weekend that is digested. Maybe if they reveal they have 500k reservations or something the market loves it. Otherwise, there is just the Q2 ER to look forward to, and Monday is a modest selloff (sell the news could happen even if good here). Tuesday/Wed flat to down, or all 3 are down a little.

Wed, Aug 2 (Q2 ER). There are 2 competing narratives here:

1) Numbers will be bad, but that is expected and baked in to the drop we already had. All that will matter is good news about the M3. Positive words about the ramp or semi or new GF locations will make the ER received as good.
2) Numbers will be bad and it won't matter about the rest. The increasing spend for the ramp (probably) and known modest to down S/X deliveries mean a bigger than average loss per share.
​

I am in the second camp. The last few ER's the poor numbers have dominated the next day. The problem with the idea the M3 enthusiasm carries the day is that the M3 success is at best MONTHS away, an eternity in trading time. I doubt there will be enough accounting miracles in the ER to save it, but they could choose to pull out the stops and make the loss less than expected. If I were Elon I wouldn't bother trying to save this one. Q3 or Q4 would be the time (preferably both) to window dress.

One way that the stock might go up on Thursday the 3rd is a relief rally. Just having the bad news out might cause shorts to get out who where hoping for more and pull in longs afraid that they are missing the bottom. Because...

After that it is straight up, until (maybe) nervousness about Q3 ER but even Q3 might be good depending on the ramp. I predict a slow and steady ramp up to 380+ in the next 3-6 months as the base case. Could be more.

Here a cartoon with mock prices from my posterior:

View attachment 237499

(Edit: I am aware it won't be a perfect ramp. Just picking a slope to get an end point. Drunken walk with huge swings )

That ramp up might be WAAAAY slower but I think 380+ by the end of the year. Much like the Q1 ER, I expect a very rapid recovery from the ER drop. So I will be looking to lighten up leverage this week and reload the end of next week or the week after.

Q3 of this year is problematic, could be good could be bad. But by Q1/Q2 of next year there are real big bottom line additions and you don't want to be on the sidelines going into that.

TL; DR: Down then up in the next 2 weeks.

​

Interesting. I only really differ here on the slow walk up. I predict either a few months of basically flat or a slow decline until the semi reveal thing.

What makes you think it will head upwards? More and more model 3 delivery stories and stuff?

I feel like any slow down, any rumor of a slow down, any TMC thread about "my delivery was pushed back 2 weeks" will cause major overreactions.

Actually, I just realized that the majority of early deliveries will be employee vehicles, so I guess I can count on not really hearing about early schedule slips. Maybe that represents a buying opportunity..

 

[austinEV]

Interesting. I only really differ here on the slow walk up. I predict either a few months of basically flat or a slow decline until the semi reveal thing.

What makes you think it will head upwards? More and more model 3 delivery stories and stuff?

I feel like any slow down, any rumor of a slow down, any TMC thread about "my delivery was pushed back 2 weeks" will cause major overreactions.

Actually, I just realized that the majority of early deliveries will be employee vehicles, so I guess I can count on not really hearing about early schedule slips. Maybe that represents a buying opportunity..

I am struggling with that second half prediction too. I agree, that the reality of the ramp could skew to lots of negative news. But I think the reality of rapid ramping (which I predict) pushes us back to ~380 on the logic that we got to 380 on the anticipation of M3 becoming real. The real M3 should do the same thing. May be flawed logic but there it is.

 

[MitchJi]

I guess this is our buy the rumor sell the news kickoff?

Really tempted to buy a put in a day or two (I'm expecting a bloodbath after the ER). I'll not sell my stock of course. Anyone feel similarly or feel like talking me out of it?

I'm waiting for the SP to hit $405 to purchase puts. I think that's going to happen in August or September.

 

[D-egg-O]

Ok, 240 or so. In line with expectations, I might be wrong on what the expectations are. Better than Bolt all around is my prediction too.

240mi. is my minimum range estimate as well. This is the one "rabbit out the hat" potential surprise imo, if the range is higher than expectations.

 

[MitchJi]

I respectfully disagree. His short term predictions have been pretty reliable. And I don't see what you mean by "changing his tune."

I didn't have quite enough dry powder to buy what he did last week, a July 28 $335. I put in a limit order for $3.16 when the ask was about $3.70. Today it's over $8. Too bad I didn't have an additional ~$55!

 

[D-egg-O]

I haven't done any put trading yet, just calls. Could you guys share your approach when you do this, like the strike price you target? Thanks

I purchase puts as a means to protect (short term only) some of my core shares. Basically, I think of it as insurance for major events (earnings, end of quarter deliveries, etc.).

To fund the purchase of the puts, I sell covered calls. The downside is, if the share price increases, the puts are worth less, and the covered calls increase in value (putting them at a loss if I were to buy them back). If this happens, I rollover the calls over and over until the next dip happens. Just need to make sure they have time value, so they don't execute early.

Now if the share drops after said major event, I either let the puts exercise and then buy back in at a lower price or sell the puts and purchase additional core shares with the profits.

That's my strategy in a nutshell. I got caught up trying to trade weekly call options that I lost focus, but I've learned my lesson. This last dip after Q2 deliveries would have been very fruitful if I stuck to my original strategy.

 

[dennis]

Here is my Bearish/Bullish short term prediction. I really don't like the double whammy setup for the M3 reveal and Q2 ER. I think we see some runup in the first half of this week due to enthusiasm (easy call since it is already happening) then some softening, then some retraction Thu/Friday.

Friday, July 28 (presumable at night) there will be the M3 handover party. My prediction: The most boring possible prediction on these forums, which is he delivers 30 cars, the range is in line with expectations (220 or so?) some final specs on acceleration or something. Basically they will demystify a few things that we already basically knew. No new features. They will just be proud of the car being out and leave it at that. The only thing I see them maybe doing is an update on reservation numbers if it is good, purely because that was the surprise thing they did last March during the initial unveiling, so there is a real precedent. Summary: exactly what they said would happen, no drama, no magic rabbits out of a hat.

Then, over the weekend that is digested. Maybe if they reveal they have 500k reservations or something the market loves it. Otherwise, there is just the Q2 ER to look forward to, and Monday is a modest selloff (sell the news could happen even if good here). Tuesday/Wed flat to down, or all 3 are down a little.

Wed, Aug 2 (Q2 ER). There are 2 competing narratives here:

1) Numbers will be bad, but that is expected and baked in to the drop we already had. All that will matter is good news about the M3. Positive words about the ramp or semi or new GF locations will make the ER received as good.
2) Numbers will be bad and it won't matter about the rest. The increasing spend for the ramp (probably) and known modest to down S/X deliveries mean a bigger than average loss per share.
​

I am in the second camp. The last few ER's the poor numbers have dominated the next day. The problem with the idea the M3 enthusiasm carries the day is that the M3 success is at best MONTHS away, an eternity in trading time. I doubt there will be enough accounting miracles in the ER to save it, but they could choose to pull out the stops and make the loss less than expected. If I were Elon I wouldn't bother trying to save this one. Q3 or Q4 would be the time (preferably both) to window dress.

One way that the stock might go up on Thursday the 3rd is a relief rally. Just having the bad news out might cause shorts to get out who where hoping for more and pull in longs afraid that they are missing the bottom. Because...

After that it is straight up, until (maybe) nervousness about Q3 ER but even Q3 might be good depending on the ramp. I predict a slow and steady ramp up to 380+ in the next 3-6 months as the base case. Could be more.

Here a cartoon with mock prices from my posterior:

View attachment 237499

(Edit: I am aware it won't be a perfect ramp. Just picking a slope to get an end point. Drunken walk with huge swings )

That ramp up might be WAAAAY slower but I think 380+ by the end of the year. Much like the Q1 ER, I expect a very rapid recovery from the ER drop. So I will be looking to lighten up leverage this week and reload the end of next week or the week after.

Q3 of this year is problematic, could be good could be bad. But by Q1/Q2 of next year there are real big bottom line additions and you don't want to be on the sidelines going into that.

TL; DR: Down then up in the next 2 weeks.

​

What do you think will happen to the SP if they announce 600K or 700K M3 reservations? The 373K reservations happened in one month. It has been 15 months since then and Elon said the count goes up every week. So it is not unreasonable to expect that the reservations might have doubled during that time. Just saying...

 

[elasalle]

I'm waiting for the SP to hit $405 to purchase puts. I think that's going to happen in August or September.

100 M3's in August might not move the needle, but 1500 cars in Sept definitely will.

 

[MitchJi]

I purchase puts as a means to protect (short term only) some of my core shares. Basically, I think of it as insurance for major events (earnings, end of quarter deliveries, etc.).

To fund the purchase of the puts, I sell covered calls. The downside is, if the share price increases, the puts are worth less, and the covered calls increase in value (putting them at a loss if I were to buy them back). If this happens, I rollover the calls over and over until the next dip happens. Just need to make sure they have time value, so they don't execute early.

Now if the share drops after said major event, I either let the puts exercise and then buy back in at a lower price or sell the puts and purchase additional core shares with the profits.

That's my strategy in a nutshell. I got caught up trying to trade weekly call options that I lost focus, but I've learned my lesson. This last dip after Q2 deliveries would have been very fruitful if I stuck to my original strategy.

If the SP increases as much as many of us expect, close to or surpassing Apple, the SP will have to make either a few huge surges, or a long pretty steady increase, or most likely a combination of both.

Please be careful, because if it's a long steady rise you could lose a ton if you continue to follow that strategy.

 

[D-egg-O]

If the SP increases as much as many of us expect, close to or surpassing Apple, the SP will have to make either a few huge surges, or a long pretty steady increase, or most likely a combination of both.

Please be careful, because if it's a long steady rise you could lose a ton if you continue to follow that strategy.

I also have quite a few Jan19 LEAPs in case the SP rockets up later this year. Worst case, I limit my gains with the covered calls. I don't lose money. I wish TSLA would follow a long steady rise pattern. The polarizing nature of the stock says otherwise.

 

[Curt Renz]

100 M3's in August might not move the needle, but 1500 cars in Sept definitely will.

The planned acceleration rate for Model 3 production appears to have been quite wisely considered. Hiccups in the Model X ramp must have served as a lesson.

Initial Model 3 owners will essentially serve as beta testers. Their concerns should quickly result in improvements on the assembly line. Employees will be the first owners. Their input will go directly to Tesla engineers. Then non-employee California Model 3 owners will be communicating with engineers.

Virtually all bugs should be cleared out before production is really cranked up and deliveries can be made to those of us further east. If this ramp-up indeed goes as planned, the market should be expected to nicely reward long-term shareholders.

 

[Tslynk67]

So... there is no news causing this?

Well I just pulled the trigger on a MX P100D ex-press car, maybe that got out?

 

[geneclean55]

Big Tech ERs this week. Be interesting to see how Nasdaq (and TSLA) reacts.

 

[bdy0627]

I purchase puts as a means to protect (short term only) some of my core shares. Basically, I think of it as insurance for major events (earnings, end of quarter deliveries, etc.).

To fund the purchase of the puts, I sell covered calls. The downside is, if the share price increases, the puts are worth less, and the covered calls increase in value (putting them at a loss if I were to buy them back). If this happens, I rollover the calls over and over until the next dip happens. Just need to make sure they have time value, so they don't execute early.

Now if the share drops after said major event, I either let the puts exercise and then buy back in at a lower price or sell the puts and purchase additional core shares with the profits.

That's my strategy in a nutshell. I got caught up trying to trade weekly call options that I lost focus, but I've learned my lesson. This last dip after Q2 deliveries would have been very fruitful if I stuck to my original strategy.

Curious what strike price for the puts you target? ITM? OTM? Thanks

 

[Turing]

He seems to call his successes post-facto. I mean he might be telling the truth but you can't tell for sure.

I think his general TA advice and what to consider is good and some of his calls are legit, but you can't trade on much of his calls since as you mentioned they are often post-facto. Like today when he said it hit his $341 price target, he didn't mention that target until it was hit and his review over the weekend leaned cautionary for tsla, but he did post that he was holding calls over the weekend, if i remember correctly.

 

[D-egg-O]

Curious what strike price for the puts you target? ITM? OTM? Thanks

I'll DM you so we take this convo off this thread.

 

[Turing]

I don't think there were. Product announcements have historically been snoozes. We enthusiasts get all excited but the market doesn't care unless it translates to dollars. In fact, if you really zoom out, news of any kind has averaged negative. Tesla goes up on boring days. Today is a banner example.

One of exception to this that comes to mind was the original powerwall/powerpack launch, but this was because Tesla reported high demand with reservations. I think we could see a bounce from the 3 launch if we get pre-order updates that exceed the markets expectations by a decent amount. I'm guessing has to be 500k or more. Not sure how likely that is.

 

[Papafox]

With today being a green day, TSLA has just traded red-green-red-green for the past 9 sessions in a row. If the pattern continues, tomorrow would be a red day and Wednesday a green day.

 

[Words of HABIT]

...
Rumor says 60 and 75kWh variants, and Bolt's 60kWh and terrible Cd gets it 238mi. Physics says that 3 will be at least similar, if not significantly better than Bolt on a Wh/distance basis. I'm also completely unprepared to believe that Elon will allow any arguments that Bolt > 3 in any way shape or form.

Agree. Screen capture of M3 during charging has been transposed to 300mi. range assuming 75kWh variant. What 300mi. is to 75kWh, 240mi. is to 60kWh, conveniently and purposefully above the Bolt's range. I would be extremely surprise if M3 range numbers come in lower than this. The Bolt is a smaller, lighter, less performance car than the M3 however superior Tesla batteries more than make up that difference for the 60kWh variant.