Colin, reiterating his Sell rating. Is it me, or are bearish analysts - UBS, Merrill, David "Goldman Muppet" Tambarinno, Pacific Crest all rushing to get their negative ratings out. Earnings are out tomorrow, what is the rush to flog Tesla the day before? I think Goldman Muppet has reiterated Sell 3 times in the last three weeks. It's like an ugly American tourist on vacation in Europe and, finding someone that doesn't speak English, just keeps saying the same things, but louder. 24 hours and 10 minutes til the conference call."the consensus" is a total mess this report. i re-copied our table below for easy reference.
you notice how some analysts forecast solar city, some do not. some include nci's, some do not. some forecast gaap, and some non-gaap. the point of the table was to try to get an apples-to-apples comparison of the different estimates.
i feel confident in saying first call, estimize, wsj, and other sites have not delved so deeply into the nuances of this quarter's report to do anything more than trying to get all estimates at gaap or non-gaap. to make matters worse i don't even know if the "consensus" reported is a gaap or non-gaap number. a properly constructed official "consensus" would take these moving parts into account by holding them consistent across models as we tried to do.
whatever the headline gaap eps number and initial reaction are, the people following this thread (i think) would know they have to look deeper to find the operational performance. to that end i had put together the "net income zero nci's" column in the table below - that's the number before net income is adjusted for non controlling interests. that one number that should give a quick read on how tesla did operationally.
just about everyone is estimating a gaap loss (except jp morgan who also modeled meaningful solarcity nci's). and everyone including me is expecting "net income zero nci's" to be -148m or less. i still think something is wrong with a ubs target of 160 while our read on their model has them at the highest "net income zero nci's" estimate.
my opinion continues to be that positive gaap and non-gaap earnings will come riding on the back of the solarcity nci accounting. i believe that the eps beat will be viewed as low quality, with the positive offset being a positive gaap eps number brings the s&p index addition into play. i believe operationally tesla executed well, that will also help if it shows through in the report. i believe analysts smarter than us figured most of this out by mid-march with most doubts erased at the release of the deliveries number.
the hard part about being very early is that you've been thinking one thing for so long you fail to understand how far behind the rest of the world is. this has happened to me many times in my trading and i still don't know how to fight that feeling.
on market sentiment: the options market appears decidedly tipped positive - there seems to be more outstanding calls than puts. options are bullish for what i call "relative event risk." that is, if you look at equally far out of the money calls vs. puts, you find the calls are somewhat more expensive. you see this happen when people are buying more calls and selling more puts going into an event - especially in the farther out of the money options the pricing now is driven nearly 100% by event risk. example: stock closed near 322.50, 300 put was 1.70x1.75 but 345 call is 1.83 x 2.00. this is different from how i remember 2013, when puts were skewed high due to the high cost to borrow.
another concern is we haven't seen large stocks make huge moves on earnings this season. most of the big movers have been 2nd tier type stocks, and i can't think of one that went for even +25%.
apologize for repeating many things i've said before, just trying to summarize the cross-currents i see. while i remain positive on the actual report, i am feeling less confident that the market reaction will be extremely positive - especially after the recent 27 point move off the 300 level. i think the best value for my out of the money gamble might be 5/5 370's for 25c. a surprise 15% move would bring those into play and the price is low enough to be able to snag a 20x+ winner. i don't like selling the puts because i'm not being paid well to do it.
here's an options table showing open interest for 5/5, notice the at-the-money level in yellow and see how many more calls there are vs. puts?
View attachment 225228
[TR][TD][/TD][/TR] [TD][/TD] [TD][/TD] [TD][/TD] [TD][/TD] [TD][/TD] [TD][/TD] [TD][/TD] [TR][TD]Deutsche Bank[/TD][TD]$240[/TD][TD]-1.41[/TD][TD]-230[/TD][TD]n/a[/TD] [TD]n/a[/TD] [TD]No[/TD][TD]Had forecasted +4.19 of EPS for FYE 2017 prior to 3.14.17[/TD][/TR]
Bank Price Target Q1 GAAP EPS net income zero nci's Operating Income Net Income Include any NCI's? Comments UBS $160 -0.39 -148 Full Year -561 Full Year -477 GAAP Yes: $338 for FYE 2017 n/a luvb2b n/a 0.61 -176 -52 99 gaap yes: $275 for q1 non gaap figure 50c higher than gaap eps at 1.11 Barclays $165 -1.57 -256 -199 -173 non-GAAP No forecasted -1.07 non-gaap eps Baird $368 -1.73 -282 -230 -198 non-GAAP No forecast -1.23 non-gaap eps Morgan Stanley $305 -1.94 -326 -255 -326 GAAP No Does not forecast SolarCity. merrill lynch $160 -1.44 -395 -325 -245 GAAP yes: 150m per quarter in '17 non-gaap eps estimate at -0.85, includes 100m stock comp on 170m shares muppet sacks $160 -1.07 -466 Full Year -864 non-gaap Full Year -1348 nonGAAP Yes: $1166 for full yr 2017 working off what appears to be a non-gaap eps figure of -0.57 - figures may be inaccurate need better data
[TR][TD]J.P. Morgan[/TD][TD]$185[/TD][TD]0.27[/TD][TD]-256[/TD][TD]-159[/TD] [TD]134 non-GAAP; 44 GAAP[/TD] [TD]Yes: $1,050 for FYE 2017 and $300 for q1-17[/TD][TD]Was previously forecasting -1.52 of EPS for Q1 before modeling impact of SolarCity. forecasted 0.83 non-gaap eps.[/TD][/TR]
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