2017 Investor Roundtable: TSLA Market Action

[zdriver]

TSLA only? Or most tech stocks as well. Looked to me that almost all big NASDAQ stocks showed a markedly similar pattern. Does the software also look at ETFs?

Only looks at what I have it running on. It's tape reading software, so it has to run from open to close, reading every print, "accumulating" numbers whenever it identifies a given trade as being likely one type of trade or another.

Looking briefly at what I have, looks like AMZN had some fairly strong dark pool selling today (similar, but ~15% less than day before ER), BABA had mostly mild profit taking levels of dark pool selling, ditto for NVDA, both of which seem to have more day trading going on than large accumulation/distribution. FB (stronger one today) was flat to maybe minor dark pool accumulation. GOOGL had buyers. (not surprising, given current discount)

 

[GoTslaGo]

So it sounds to me that you're an Elliot Wave practitioner. What's your target for our current bear trend? My working hypothesis is that we are in Wave 4, with a bottom around 280-290. If it breaks below that then it violates the rules for Wave 4, which implies to me we are still in Wave 1. However, this can be questionable because with the initial series of Motive Waves in 2013-2014, what looked to be the ideal Wave 4 seemed to violate the rules (Curt Renz had asked Prechter about this and he equivocated as well). I tried to reconcile this with a combination pattern to get to our current motive cycle. Curious as to your thoughts... assuming you are an Elliot Wave practitioner.

How come when I ask Elliot Wave questions, everyone runs away?!?....

 

[GoTslaGo]

Only looks at what I have it running on. It's tape reading software, so it has to run from open to close, reading every print, "accumulating" numbers whenever it identifies a given trade as being likely one type of trade or another.

Looking briefly at what I have, looks like AMZN had some fairly strong dark pool selling today (similar, but ~15% less than day before ER), BABA had mostly mild profit taking levels of dark pool selling, ditto for NVDA, both of which seem to have more day trading going on than large accumulation/distribution. FB (stronger one today) was flat to maybe minor dark pool accumulation. GOOGL had buyers. (not surprising, given current discount)

Thanks! Very edifying!

 

[DragonWatch]

Too bad that bulls' news did not prevent today's drop. Hope you got in at a desirable price though.

For me money is not everything My first Tesla shares were back in 2013, and added more along the way. I spent two years begging forgiveness from my wife after finally encouraging her to invest with a subsequent mega drop, so far I am out of that dog house. I am still wrestling with having squeezed blood out of a turnip to purchase our MX, but am coming up for air soon. This current downer too shall pass as I work through the hell. I always have and always will and I can say I have lived through some real downers and some ugly hells. See you on the other side shortly. We can all sing Kumbaya with the M3 assembly staff in six months And, a big thanks to the 500K reservation holders!

 

[D-egg-O]

How come when I ask Elliot Wave questions, everyone runs away?!?....

Well, I will admit I have no idea what any of that is.

 

[McKricas]

So it sounds to me that you're an Elliot Wave practitioner. What's your target for our current bear trend? My working hypothesis is that we are in Wave 4, with a bottom around 280-290. If it breaks below that then it violates the rules for Wave 4, which implies to me we are still in Wave 1. However, this can be questionable because with the initial series of Motive Waves in 2013-2014, what looked to be the ideal Wave 4 seemed to violate the rules (Curt Renz had asked Prechter about this and he equivocated as well). I tried to reconcile this with a combination pattern to get to our current motive cycle. Curious as to your thoughts... assuming you are an Elliot Wave practitioner.

No. I'm not a EW trader nor I believe it works. Although it may have some bits in the right place.

Most indicators are not useful too. One reason is because they lag, sometimes by a lot.
Lag is good for confirmation but it's awful for trading. In trading you want to get in as soon as a trend starts and exit as soon as a trend end.
If you wait for an indicator signal, most of the times it's time to exit, not to enter the market.
This is the reason why most of the traders loose. They're always too late. On entering and exiting the market.
Don't rely on indicators. None of them.

If I would give an advice I would just say to use Price & Volume.
This is the only true data, unfiltered, unbiased, in real time that comes directly from where the action really happens.
Everything that's happening, at any given moment, these will tell you.
It's how the market talks. You just need to learn how to listen it.
Many indicators are like lousy translators, they listen, they interpret and then they translate to something you think understand.
So, most of the times, they are too late and fail. With them, traders fail too

 

[ValueAnalyst]

Simple intrinsic value handle

Discounting 2018 to obtain an intrinsic value of shares today.

2018 model s + x units sold : 110,000 at $100,000 = $11.0 billion
2018 Model 3 units sold : average 7,000 per week over 48 weeks @ $43,000 : $14.4 billion
2018 total car revenues: $25.4 billion

Assume 7.5% net profit margin on $25.4. = $1.905 billion
Assume a p/e of 40 for fast growing: mkt cap = 40*1.905 = $76.2 billion
shares outstanding say 161 million
stock price = mkt cap/ shares outstanding = $7.620/ .161 = $473 per share

Discount at 30% = $473/1.3 = $363 intrinsic value today.

Potential reward : the difference between $473 and $323 today: 473-323 = $150 per share.

Just a guess estimate to get a handle of where we stand, consider it wishful thinking.

(assume the energy business contributes nothing.)

One more thing: use diluted shares outstanding for valuation purposes, so ~180 million.

 

[Runarbt]

How come when I ask Elliot Wave questions, everyone runs away?!?....

This is Elliot:
http://www.pxleyes.com/images/contests/waving/fullsize/waving_4c6018bf6e209_hires.jpg

 

[Irishjugg]

In Stock Market the main objective is not to "understand the people's behaviour"...it's to make money.

You need to understand this: The market is always right..always and every time, no exceptions.

If the market is doing something you don't understand or you don't have an explanation to it, the problem is in you and not the market.

Charts shows movements of price splitted in time containers. Investors make transactions. Transactions make movements in price. This movements is what makes an investor money. The larger the movement the more money an investor makes. No movement, no money

You enter in the same direction of the market, then you hold and catch its movements until they finish. When the market turns you exit or reverse your position.

Easy peasy, right ?

TSLA is in a short an medium term bear trend. It will continue for some more time until both these movements are exhausted and these trends switch to bull again.. It will happen first on the short term and then on the medium term unless these trends continue and the long term trend switches to bear too.

No one knows when or what will be the order of these events, but is possible to identify situations that helps to determine what is happening inside the trends and when they are close to switch.

And I can tell you this: it's not the news.

Movements in the stock price is not a reaction to news. Most of the times its exactly the opposite. It's the movement in price that triggers some kind of "headline" in some newspaper...media just delivers what everyone wants: a reason.

You aren't correct in practice.

The text book definition of a perfectly efficient market that's perfectly informed is a simplifying abstraction for the classes you (are taking?) took on it, they aren't real or accurate.

 

[kenliles]

Even Tyrion Lannister is not right all the time

and yet-
he always pays his debt
(thank you Tesla)

 

[brian45011]

Assume 7.5% net profit margin on $25.4. = $1.905 billion

Based on what?

Annualizing 1Q17 reported results:
GM%= 24.77
So Gross Profit on your $25.4 billion in Revenue would be $6.3 billion.
Annualized Operating Expense would be $3.7 billion for an Operating Profit of $2.6 Billion
To get to Net Profit deduct another (annualized) ~$0.5 billion in Interest and Other Expense to yield $2.1 billion Profit.

Your $25.4 revenue is over three times annualized 1Q17 revenues.

IMO, it's extremely unlikely, even with operating leverage, that Operating Expenses and Interest and Other Expense will not increase by a factor of 1.5 times 1Q17 annualized. If they do, Tesla will break even for 2018.

 

[ValueAnalyst]

Based on what?

Annualizing 1Q17 reported results:
GM%= 24.77
So Gross Profit on your $25.4 billion in Revenue would be $6.3 billion.
Annualized Operating Expense would be $3.7 billion for an Operating Profit of $2.6 Billion
To get to Net Profit deduct another (annualized) ~$0.5 billion in Interest and Other Expense to yield $2.1 billion Profit.

Your $25.4 revenue is over three times annualized 1Q17 revenues.

IMO, it's extremely unlikely, even with operating leverage, that Operating Expenses and Interest and Other Expense will not increase by a factor of 1.5 times 1Q17 annualized. If they do, Tesla will break even for 2018.

You are reasoning by analogy, rather than first principles.

$25 billion revenue is unreasonably conservative as it basically means 100k Model S/X combined and 250k Model 3's delivered in full yaer 2018 on top of assuming zero growth for annualized 1Q17 Tesla Energy revenue. Tesla will be building cars at that run-rate by end-2017, so basically $25 billion of revenue assumes no growth from end-2017 to end-2018.

So the revenue projection that you identified in bold as too optimistic because it's 3x of annualized 1Q17 revenues (i.e. reasoning by analogy) in fact incorporates only half of the growth management guided for 2018. If you break the forecast down to its components, you will realize that $25 billion revenue projection for 2018 is unreasonably conservative.

 

[Paracelsus]

You are reasoning by analogy, rather than first principles.......

With all due respect to @brian45011..........thank you @ValueAnalyst for the reminder to continue to view Tesla through the windshield of First Principles instead of through the rear view mirror of Analogy. That difference in perspective has clearly separated the analysts & investors who have been more successful/accurate with TSLA (Andrea James, Ben Kallo, Ron Baron) from those who have not (Chanos, Lutz, Speigel, etc). IMHO it is the fact that Tesla made the decision early to create its entire vision and methods to support that vision through the process of First Principles instead of through Paralysis by Analysis that they have been able to literally clear the path of all competition going forward. The game is theirs alone to win or lose at this point because of the value that the First Principles perspective brought to the stagnated industries of vehicles and energy that clearly lacked any new vision. Keep up the good work you do through your lens of First Principles.

 

[ggies07]

wow, I would never have thought $318 would be the price after the Model 3 reveal going into production.....

 

[racer26]

wow, I would never have thought $318 would be the price after the Model 3 reveal going into production.....

gotta frame that reveal as a bad thing. Really, the short's playbook is getting pretty thin - its almost transparent at this point.

Some time between now and 2019 there has to be some big action - Model 3 will prove profitable, we'll get net profitable trailing 4 quarters, and get added to the S&P. One of the catalysts along the way will send that near 20% short interest running for the exits. No other stock with a cap this big has short interest this big. That's an unsustainable situation.

 

[ValueAnalyst]

wow, I would never have thought $318 would be the price after the Model 3 reveal going into production.....

Anything is possible in the short-term with TSLA: The majority of the shares is held by Elon and very long-term investors, a lot of retail investors who watch price action second by second and let it affect their emotions, and a team of bears funded by various interest groups collaborate to manipulate the stock.

Use this to your advantage.

 

[Runarbt]

wow, I would never have thought $318 would be the price after the Model 3 reveal going into production.....

I do think we got a smiliar Down dip after model s also, and after most ERs, even the good ones. ;-) However, it only lasts 3-5 days or so (from memory).. dunno how this Works With ER coming up. Another 3-5 red days? Or are we so low now, that good guiding and TE News (Revenue?) will turn us green and towards a New ATH within weeks?

 

[AlMc]

wow, I would never have thought $318 would be the price after the Model 3 reveal going into production.....

gotta frame that reveal as a bad thing. Really, the short's playbook is getting pretty thin - its almost transparent at this point.

Some time between now and 2019 there has to be some big action - Model 3 will prove profitable, we'll get net profitable trailing 4 quarters, and get added to the S&P. One of the catalysts along the way will send that near 20% short interest running for the exits. No other stock with a cap this big has short interest this big. That's an unsustainable situation.

I don't believe @ggies07 is short the stock. I think he is just saying he is surprised at the SP after the reveal/start 3 production.

Personally, I think the dip has more to do with the prevailing (may be wrong) thought that the Q2ER will not be received well.
WS has been punishing tech/high flyers that even have decent ERs this quarter and seemingly only rewarding ones with blow out numbers.

 

[Waiting4M3]

Hey, looks like good ol' morning dip is back

 

[EinSV]

gotta frame that reveal as a bad thing. Really, the short's playbook is getting pretty thin - its almost transparent at this point.

Some time between now and 2019 there has to be some big action - Model 3 will prove profitable, we'll get net profitable trailing 4 quarters, and get added to the S&P. One of the catalysts along the way will send that near 20% short interest running for the exits. No other stock with a cap this big has short interest this big. That's an unsustainable situation.

Maybe I'm just getting immune to it but the FUD since the reveal has struck me as pretty uninspired. On the flip side the FUDsters do seem to be out in large numbers on social media since Friday.