2017 Investor Roundtable: TSLA Market Action

[Richgoogol]

I remember clearly someone said something regarding the SP being correlated with the page number here in this post a while ago. I wonder when is it going to happen again.

 

[supratachophobia]

I agree with Fred and Jesse on that... but I've also learned that I can't predict the short-term reaction to news. I hear good news, the stock goes down; I hear bad news, the stock goes up. Go figure. That's why I'm not at all certain about market reactions until sometime next year, when the *reality* of Model 3 will be visible on the profit-and-loss sheets and demolish some of the more ludicrous claims which some bears have been pushing.

Adjust your view assuming there was prior knowledge of the news. I think you'll find it interesting. My best theory is some Tesla exec's wife and some hedge fund manager's wife do hot yoga together twice a week.

 

[zdriver]

Fair warning everyone, this week's candle is shaping up to be really ugly. 2015 topped in a similar manner (though compressed timeframe between peaks compared to 2017).

Granted, there's a lot of catalysts coming up, but once there's downward momentum shorts tend to regain confidence and the last month or two of progress can be quickly erased...

Hmm, I wouldn't call this downward momentum just yet. We are still flat for the week, in a week when macro events are affecting the market.

Not calling it downward momentum yet. However, ending the week <370 will look like a topping red candle on weekly. Anymore downside next week (another Monday morning downgrade, etc) will easily make for some downward momentum - which would "confirm" this week's candle, and closing next week below $356 will additionally make for an ugly red topping candle on monthly. Anything less than an awesome delivery report in early October will only serve to embolden shorts further after that. And all that is even assuming macro doesn't act up too much...

tl;dr: be careful, $350 or less very well could happen before $400.

I should probably listen to myself more, could've avoided a fair bit of pain by selling my trading LEAPs last week...

 

[Papafox]

Nasdaq took a dive, TSLA amplified it.

I have a name for this. I call it "Dip on Steroids". If you look at how the volume picked up during the NASDAQ dip, you can guess that the normal amplified dip was enhanced with short-selling to turn such a benign dip into a $4 loss for TSLA over a mere half hour. This deep a dip on so little broader market dip is particularly notable because TSLA did not share in the significant run up today with the NASDAQ. I think the shorts were at their best game today, but once proof of successful execution comes forth, the tide will turn.

 

[baudwalk]

I was thinking of selling a 350 or 355 covered call, but a friend reminded me that the SP would probably pop to 400.

 

[bdy0627]

I should probably listen to myself more, could've avoided a fair bit of pain by selling my trading LEAPs last week...

Yes, in addition to yours there were several warnings that this was likely to get ugly as we dropped hard off the ATH. I waited to add until we had dropped pretty substantially but I would have loved to exit with my trading LEAPs last week too! Since then, we identified strong support ,which we have now fallen through. I guess the third time was the charm so now it's on to $330s? Definitely not selling a single share now. But I will add some more at some point. At this point, I'm going to wait until we clearly start coming back up with some authority. I think that's always a good plan but for some reason it is difficult to execute.

 

[bdy0627]

I should add, if others are thinking along these same lines then buying pressure will be soft and shorts may have the upper hand for a bit. Many longs are sitting on the sidelines, waiting....Meanwhile, bears are having their way with the stock.

 

[GoTslaGo]

Probably, because if my memory serves me correctly, TSLA usually starts to edge upward before the end of quarter production numbers released by Tesla. But considering there was a big bearish rating about Tesla may not meet demand is probably scaring bigger fish to sell off.

Here are the charts (just before the end of Q prod numbers, End of March, End of June, End of Sept 2017)

Here is 2016 (last 3 Qs):

Except for end of June 2016 (arguably because the SP took such a hit from SCTY/TSLA merger announcement), the SP always has been flat/down in recent end of the Q week. This week does not appear to be an exception.

I think it feels more extreme now since the SP has bounced off ATH x2

 

[myusername]

I remember clearly someone said something regarding the SP being correlated with the page number here in this post a while ago. I wonder when is it going to happen again.

could be any moment... i think it has something to do with my mood

 

[ValueAnalyst]

I'll make another point here. Surely some percentage of the bearish TSLA traders are sensible people, making reasonable pessimistic analyses, based on technicals or fundamentals or whatever. But it's clear that there's another group of bearish TSLA traders who are *complete idiots* and that there are *a lot of them*. Probably at least 20% of the bearish traders; maybe over 50% of the bearish traders.

When these people give up and bail out, whether because the news is too overwhelming or because they've lost all their money to margin calls, it will cause a large skew in the supply and demand for TSLA stock. Who's going to replace the idiot "it's going to zero!!!" traders in the bearish side of the market? I think nobody replaces them, at least until the stock has gone up even more so that more bearish valuation arguments can be convincingly made. And I think the idiots give up sometime in 2018 or 2019.

I should also repeat that I expect Tesla to achieve GAAP profitability long before it achieves positive free cash flow; such is the nature of capital-intensive businesses. Some of the idiots might keep trying to short the stock after it achieves profitability by looking only at cash flow, but I just can't see a large number of them doing that for long.

I'm expecting Q3 deliveries and financials to look superficially terrible, and then there's a general tendency to have stock price drops at the end of the year driven by tax considerations, but I think the situation for the short-sellers becomes terrifying when Q4 deliveries and financials are reported, and even worse when Q1 numbers come out.

Now, if I were naive, I would attempt to time this. But I'm not. The odds are that some big player like Tencent has made the same calculation and will be scooping up shares before January, causing a rally to happen early.

There is no "general tendency to have stock price drops at the end of the year driven by tax considerations," unless if SP has dropped substantially in the year.

I expect "idiots" to disappear long before 2019, likely in 1H18, if not 4Q17, depending on when Tesla can show GAAP profitability. If Tesla can say in November that it will show GAAP profitability in 1Q18, then "idiots" are gone by year-end.

I agree that Tesla will reach GAAP profitability before positive free cash flow, but this doesn't really matter.

Unclear why you expect 3Q17 deliveries to look terrible when all signs point to strong Model S/X deliveries.

 

[Krugerrand]

I expect "idiots" to...

Here's the thing; there's no fixing idiocy so you should expect 'idiots' to continue to behave idiotically. All hail the Idiots! For we have them to thank for the yet to happen short squeeze.

 

[Navin]

I think I know what’s going on RE: production

There are a couple of bugs associated with m3 (radio, phone not connecting, etc)

Because they aren’t 100pct - tesla may be producing them but not shipping. This could explain the lack of Vins but also explain comments dragon heard along with comments from Teslarati today.

 

[neroden]

Super important. Does this website have a history of being accurate

Tesla's "Design Your Model 3" invitation email expected to arrive soon

Teslarati's leaks are not 100% accurate but they're accurate more often than not. Does that help?

 

[bdy0627]

If Model 3 production is actually ahead of forecasts, as indicated by Teslarati, that information will likely come out at the time of the Q3 production numbers in just a few days, right? If so, that would take some traders by surprise I'm sure. That wouldn't fit the notion that someone knows some bad news and that is what is behind this latest drop. This partly appears to be a sell the rumor scenario leading into Q3 deliveries. Quite a setup for something unexpected or at least buying the news.
What day is the announcement expected? I believe it is 3 days after the end of the quarter but isn't it usually released on a Sunday night?

 

[geneclean55]

If price keeps dropping through Friday. I will definitely be doing a lotto play for delivery surprise.

 

[UnknownSoldier]

I have cash in my account and ready to pull the trigger on more shares. Just seeing where the bottom is on this drop. But yeah, if delivery surprises in a positive manner, SP is going to jump.

 

[D-egg-O]

If Model 3 production is actually ahead of forecasts, as indicated by Teslarati, that information will likely come out at the time of the Q3 production numbers in just a few days, right? If so, that would take some traders by surprise I'm sure. That wouldn't fit the notion that someone knows some bad news and that is what is behind this latest drop. This partly appears to be a sell the rumor scenario leading into Q3 deliveries. Quite a setup for something unexpected or at least buying the news.
What day is the announcement expected? I believe it is 3 days after the end of the quarter but isn't it usually released on a Sunday night?

Yes.

Sunday, Monday, or Tuesday. Yes, not later than 3 days past end of quarter. I hope the numbers come out Sunday. They did this for Q1 2017 iirc.

 

[schonelucht]

Sunday if it's bad. Monday if it's good is my theory. Tuesday if it's stellar?

 

[mrdoubleb]

If Model 3 production is actually ahead of forecasts, as indicated by Teslarati, that information will likely come out at the time of the Q3 production numbers in just a few days, right? If so, that would take some traders by surprise I'm sure. That wouldn't fit the notion that someone knows some bad news and that is what is behind this latest drop. This partly appears to be a sell the rumor scenario leading into Q3 deliveries. Quite a setup for something unexpected or at least buying the news.
What day is the announcement expected? I believe it is 3 days after the end of the quarter but isn't it usually released on a Sunday night?

Based on all the data we have from the US and Europe, the first 2 months of the quarter were already very strong for S&X. We can only hope that Norway's September is not an anomaly but an indication and a very bullish one. I for one believe Tesla will make good on their promise for a stronger H2 of the year and S&X deliveries will be 25k+.

Now as I said before, if M3 ramp is off, the above fact may only soften the blow. The M3 of course is larger than itself, a good chunk of TSLA valuation is based on it.

However, if Teslarati is right and M3 production is doing well and we get positive news on it on top of super strong S&X, then I wouldn't be surprised of hitting $400 in October.

 

[Tslynk67]

Brussels declares city centre an emission-free zone as of 2018:

Voici comment Bruxelles va se débarrasser des véhicules polluants

Correction: low-emission zone - see below...