2017 Investor Roundtable: TSLA Market Action

[Ulmo]

I work in construction. I never discuss Tesla at work, and no one knows I owned one, or own stock, or am interested in it. I'm surrounded by construction pollution and construction workers willing to do a lot of pollution. This morning my regular construction boss told me that Tesla is planning to come out with a pickup truck, and he really sounded excited about it, and anyone who heard him seemed intrigued and happy. Read Elon's tweet and see what he said about that:

Yes, you read that right.

Conclusions:

• People are really enthused by the concept of owning a decent price good quality electric pickup truck with all the necessary bits (long range, good hauling, etc.)
• People who you don't think are paying attention to Tesla are, but just are not interested in things that don't provide anything to their market needs.
• The above tweet was thrice interpreted from English to English to come up with that conclusion. That means that we have kind of no idea where they're headed with that, and when. It also means people are so excited that they are reading into things.

So, I told you so, Elon, that pickup trucks are popular, and that goes for a good electric (such as the Tesla Model S is to the Mercedes sedan lineup) as well. And, everyone else, Elon didn't come out and say pickup truck is coming; he just kind of asked.

 

[Krugerrand]

At this point, I am too stupid to get too excited about triangles this and triangles that, and trend lines, LSMFBs, and the rest of it but it is entertaining!

Don't be fooled by the 'fake' excitement caused by triangles et al. The 'real' excitement only happens when the unicorns come out to play.

 

[T34ME]

The 'real' excitement only happens when the unicorns come out to play.

Excellent, I had to go look up 'unicorn' and there it was, right under my nose! I had no idea! Thank you, learned something new!

$$$$$TSLA$$$$$

 

[neroden]

Are you sure about that? I thought as long as you used the loan for investment purposes the interest you pay was tax-deductible.

That's the key point: you have to buy "investment property". And a lot of stuff isn't, for this purpose.
If you spend the money, the interest isn't deductible.
If you buy real estate for personal use, the interest isn't deductible.
If you're using it to finance a trade or business activity which you actively manage, that's *NOT* investment property, though it's deductible from the business accounts. (IIRC you could deduct this interest if it was from a pledged asset line or a personal loan too.)
If you're using it to finance rental real estate, that's a "passive activity" and must be deducted on the rental real estate profit computation, not as investment interest. (IIRC you could deduct this interest if it was from a pledged asset line or a personal loan too.)
If the loan is used to buy tax-exempt bonds, it's also not deductible.
And if it's used to buy a "straddle" (such as an options spread), the rules get very complicated.

So, messssy rules.

My bank/broker was fine with me taking money from my asset-backed line of credit and using it to purchase stock/options.

Yeah, so, don't get audited by the SEC -- if the asset-backed line is backed by stocks (as opposed to, say, real estate) that's strictly illegal. You have to use margin instead. Did you read the terms of your asset-backed line of credit in detail?

Since money is fungible, it's not that easy to run afoul of this (as in, I can take a loan from my asset-backed line of credit, put it in my bank account, and then put the money that was previously in my bank account into my brokerage account, which is legal), but officially, such lines make you promise not to buy stock with them. The SEC keeps track separately of the volume of margin loans (used to buy stock) and the volume of non-margin loans against stock (used for other things) for the purpose of watching out for risk factors such as were present in 1929, so they require a separation.

 

[DaveT]

Yeah, so, don't get audited by the SEC -- if the asset-backed line is backed by stocks (as opposed to, say, real estate) that's strictly illegal. You have to use margin instead. Did you read the terms of your asset-backed line of credit in detail?

Isn’t that what Elon does, namely use his asset backed line of credit to buy TSLA stock during certain occasions? Or is he using margin?

 

[neroden]

Isn’t that what Elon does, namely use his asset backed line of credit to buy TSLA stock during certain occasions?

That's considered a margin loan.

Maybe you have an "asset backed line of credit" which is actually just a margin loan? It'll have margin rates. You can use margin for spending if you like.

Margin's typically got a nasty and strange rate structure, where the rates are high for small loans and go down only for enormous loans.


....edit since I thought of something: if Musk has a line backed by *privately held SpaceX stock which is not registered with the SEC*, I have no idea what that's considered, but probably none of the SEC rules apply, since they only apply to borrowing against stocks of public listed companies IIRC.

The system where people pledged stock at a bank, borrowed against the stock at the bank, took the money to the broker, bought stock with it... it was part of the way the entire banking system was taken down by the Crash of 1929 so there are a lot of regulations about it.

 

[Papafox]

Regarding how the market is going to react tomorrow and the rest of this week to the Jeffries analyst note, I think we'll see shorts trying to give the stock more of a push downhill, and maybe they'll have some success tomorrow, but there just isn't an underlying fear in longs at the moment to cause a prolonged drop. That's what the shorts don't understand. They were very good at pushing TSLA down when longs were worried about the November 2016 SCTY merger, and more recently there was concern by some longs about the 2Q17 ER which could create some (as it turns out inappropriate) underlying fear, but at the present time longs are expecting the SP to rise as Model 3 ramps up, and the old games don't work so well in a positive environment. Macros and surprise Tesla news are always wild cards, but lacking negative influences this stock has every reason to either consolidate for a short spell or begin its climb again before long.

Edit: I think most investors realize the Jeffries note lacked substance and today's selling was mostly by less-informed longs or shorts jumping into the game at what they perceive as an attractive summit (they. can't make out the crags of Mt. Everest towering above, shrouded in clouds). There is a limit to how many people will follow in their footsteps. Remember that every rally brings in a new crop of newbie TSLA investors who are rather easy pickings for the shorts and FUDsters. Some of the newbies terminated their positions today.

 

[DaveT]

Does anybody have the Jefferies note in full? Please PM me.

 

[myusername]

The ridiculous and totally idiotic Jeffries note did absolutely nothing to detail uptrend today
Look at the totally super awesome cup with handle and the uptrending channel that TSLA is in
From TA standpoint this stock remains in a very strong uptrend and analysts making less in a year than what I make or lose in a day on TSLA can do absolutely nothing to derail the stock
Shorts are in for a rude awakening in short order

then I guess you won't like this:

Jefferies corrects Tesla price target to $240 from $280 TSLA - The Fly

 

[vgrinshpun]

ROFL

Jefferies could not even get share count right...

Solid work.

Jefferies analyst Philippe Houchois, who initiated Tesla yesterday morning with an Underperform rating and $280 price target, corrected his price target yesterday afternoon to $240. His original analysis had a share count error, Houchois explained.

 

[Navin]

I was once ranked, amongst all of the Wall Street analysts, as the #1 analyst on Apple. I have a 600 price target on tesla. So there.

 

[theschnell]

ROFL

Jefferies could not even get share count right...

Solid work.

What other basic inputs did he get wrong in his model?

 

[22522]

I was once ranked, amongst all of the Wall Street analysts, as the #1 analyst on Apple. I have a 600 price target on tesla. So there.

600 seems reasonable. Is that an 18 month number or 12 months?

 

[vgrinshpun]

What other basic inputs did he get wrong in his model?

His main problem is not in getting basic inputs wrong, it is coming with his output first, independently from any inputs, and then building his note from there.

For a hack job like this basic inputs do not matter.

 

[maxlength888]

The 'Tesla of buses' just set a range record that could spell the end for diesel buses

The "Tesla of Buses" goes 300+ miles but costs 700000k

 

[Richgoogol]

What other basic inputs did he get wrong in his model?

Other than his name, everything else is questionable.

 

[Navin]

600 seems reasonable. Is that an 18 month number or 12 months?

Jan 2019 price target

 

[AlMc]

I was once ranked, amongst all of the Wall Street analysts, as the #1 analyst on Apple. I have a 600 price target on tesla. So there.

My uneducated one is $500, but yours has more gravitus based on your background. It also seems more realistic than some of the ultra bearish and ultra bullish ones that we all seem to read here on a daily basis.

 

[Richgoogol]

Wow this guy actually has a good track record. https://www.tipranks.com/analysts/philippe-houchois

 

[Lump]

Jeffries EPS will have to be recalculated?

Before the share count error.
FY 2017 EPS estimate ($8.04), FY 2018 EPS estimate ($6.65) and Fy 2019 EPS estimate ($3.26).