Are you also investing in Tesla?

[Steph]

So if I'm understanding that correctly, this selling pressure is well in line with the definition and that this selling pressure is simply those that bought at the top selling at break even.. If it is right, it should spike at some point in the next few weeks?

It did breakout after the cup+handle, and it did it on very strong volume. The new downward resistance seems to be $35 now. The price drop of today is profit taking.

The good thing now is TSLA is on everyone's radar now. One good news and no one knows where the upside limit is, it's wide open.

One day does not make a trend, wait a bit and the trend will be confirmed or it will break.

 

[Larry Chanin]

Years ago, I listened to The Motley Fool radio show for a while. At first, it seemed interesting. Soon, though, I realized that they were full of s**t. They couldn't tell the back end of their alimentary canal from a hole in the ground. They tell you what stocks to buy, but if they really knew what stocks to buy they'd be too rich to spend their time publishing/broadcasting investment advice on public radio; they'd be flying private jets to exotic places where they'd be served fancy drinks by beautiful girls or boys. Their show isn't worth the time it takes to listen to it, and their newsletter isn't worth the bandwidth it takes to download it.

That said, competition from "the Big Boys" is a very real concern for a small company like Tesla. If the Big Boys decide to buy them out and Musk decides to let it go, so he can move on to something else, shareholders will get a nice pay-out, either in cash, or more likely, shares of the purchasing company. If Tesla merely loses to the competition, it could go bankrupt and shareholders could lose everything.

It's the risk of investing in a start-up company, and anybody who thinks that Tesla is a sure thing that cannot fail is living in fantasy land. It's the reason I'm very unlikely to ever buy more than my 100 feel-good shares. But I'm also not likely to get scared and sell them either, because I like the company and if the share price drops to five cents I won't lose enough that I'd miss a meal. Tesla is a small company facing real challenges and it could fail.

But on the other hand, Tesla has a great product and very savvy management who are committed to an ideal and determined to make it work. And if there are risks, there is also great potential. I believe Tesla will make it. As I said in another thread, I would not have bought my Roadster if I didn't believe the company would be around for the long term to service it. And I'd much rather support the company and its ideals by having fun driving my Roadster every day, than invest the same amount in their stock and hope that in ten years that hundred and twenty grand would turn into a million. And if the stock does go up tenfold or a hundredfold, I won't regret my decision because I'll have enjoyed this car for that decade, rather than just watching the stock ticker anxiously every day from now to then.

There are no sure things. But Tesla has a lot going for it. I express my confidence in Tesla by driving my Roadster. It's my daily driver, and it's the slickest car on the road. I think they'll succeed. But I sure would not invest my entire life savings in them, or even a large part of my portfolio. That's in much more stable investments than a start-up company with an uncertain future. TSLA is, IMO, a great place to put some of your risk capital. Not a great place to bet the bank.

Hi Daniel,

Very well-written posting, I couldn't agree with you more.

I am not an active investor, but ever since I reserved my Model S I have begun to follow Tesla stock and occasionally I read investment articles discussing it. I share your mistrust of Motley Fool's motives, since regardless of what stock they are discussing they always steer the reader to some great"deal" they are promoting.

Nevertheless, as you point out the question posed, "What happens when thebig kids decide to eat Tesla's lunch?" is a very relevant one, and I thought it would be useful to get other's slant on the question. I certainly received a lot of useful comments in response.

It may seem irrational to be prepared to pay $100,000 for a car from a startup company, but then have reservations about investing in their stock. However, I find that I probably don't have the temperament to invest heavily in a highly volatile stock. I’ll probably take your advice and buy some feel-good shares and call it a day.

Larry

 

[onlinespending]

It did breakout after the cup+handle, and it did it on very strong volume. The new downward resistance seems to be $35 now. The price drop of today is profit taking.

The good thing now is TSLA is on everyone's radar now. One good news and no one knows where the upside limit is, it's wide open.

One day does not make a trend, wait a bit and the trend will be confirmed or it will break.

Sure, and one bit of bad news and the stock could plunge. Don't be so sure that it's an inevitability that it will only go up

 

[vfx]

...I just cannot, for the life of me, understand how anyone with half a brain can look at Tesla's amazing, magical Model S drive train and expect the "big boys" to beat it within 5 years.

First signs of catching up.

http://green.autoblog.com/2012/03/1...itsubishi-electric-increases-efficiency-redu/

 

[vfx]

...Even Infinity may go for high volumes first, before trying to compete with ICEs, just like BMW seems to be fine with an about-100-mile range for the beginning. Also, these companies don't want to compete with their own ICEs, they want volume/market-share in a somewhat separate market in which people buy an EV as a second car in addition to an ICE. ...

Great point about who a car maker is competing with when they make an EV. Other makers, other EV makers, or themselves? If you read "The Car that Could" there is great insight to making of GM's EV1 The book stops as the car comes out so none of the external politics are mentioned but it shows how a separate"rag tag" team was excited about what they were doing but at the same time under the thumb of a company that did not give full support (remember GM was "forced" to build the electric car by CARB).

If you look at the way Tesla works it's s bootstrap startup. Young people working crazy hours but excited to be a part of a world changing paradigm (like us!) There are execs who are taking pay cuts from what they would make at other car companies but want to be onboard for altruistic reasons. So take that feeling that GM's EV1 team had (and Tesla even has some of those guys) with a visionary mind at the helm and that makes for a pure product that will be hard to compete with.

I would venture to say that even if Tesla was brought down by powerful outside interests (and that's what it will take) it will be the company that launches a thousand ships. Dozens of EV startups would be created out of the remains. Companies like Coda and Phoenix could get a Tesla trained employee infusion and tiny electric sports car companies would be formed. Majors like Toyota and Nissan could expand their Electric divisions with Tesla bodies. The Roadster has already proven it can be done so there is no putting the genie back in the bottle.

 

[VolkerP]

First signs of catching up...

An integrated EV motor with inverter from Mitsubishi. Ah yes, but still years behind.

• The casing looks like machined from one piece of metal. Not suitable for mass production process.
• Tesla switched to SiC IGBT for the Roadster 1.5 drivetrain. See their blog post here. The higher power allowed the single-speed, high-torque approach.
• Tesla unveiled the integrated motor + inverter in the Vehicle Engineering blog post back in Jan 2011. I remember being shocked by the radical approach.

Still, Japan grew into the shoes it wears today by copying then improving things.

 

[JRP3]

Let's not forget a company could quickly surpass Tesla if they happen upon a real battery technology breakthrough that they keep to themselves. Better, lighter, cheaper, higher power batteries would more than make up for a heavier less efficient motor.

 

[Bearman]

Still, Japan grew into the shoes it wears today by copying then improving things.

Indeed, personally i use alot of well engineered products from japan but they were often copied originally from Germany or the US. Personally ive always liked Germans and Japanese because of the pride they take in their work, my father works in Germany these days and he is admired for his knowledge, one of the very few places in the world where you are valued by your skills.

 

[Zextraterrestrial]

+2 to the Germans and Japanese!

Will the Santana Row 'event' change the stock price on Monday?
just to keep on track..
I know there are probably a bunch of people around the Bay Area that may think different of Tesla if they can see an X and the finished? signature S's. 4 Colors.

 

[AnOutsider]

I'm not sure something so low key as the models being available to view coloring would make a dent in the stock

 

[Todd Burch]

Don't forget that this weekend we'll almost certainly see the finished interior....after all, the rest of the design studio is opening. That could have a big impact on stock price on its own.

 

[onlinespending]

Unless there's some big positive surprise over the weekend, I don't see how it will impact the stock. The original announcement that the event was happening is likely what caused that nice spike in the stock late last week since it suggested that Tesla is still on schedule with the Model S. But simply seeing new Betas and a closer to finalized interior is not news since it's expected to come from the event. It's already baked into the stock price.

 

[Larry Chanin]

That said, competition from "the Big Boys" is a very real concern for a small company like Tesla. If the Big Boys decide to buy them out and Musk decides to let it go, so he can move on to something else, shareholders will get a nice pay-out, either in cash, or more likely, shares of the purchasing company.

No idea what the legal wranglings would be, but I know Elon mentioned in an interview he had to hold a certain percentage of shares as long as Tesla was part of the DOE loan. I'm sure there'd be ways to sell and work out that detail, but it does provide at least a bit of a hurdle to Elon selling off his Tesla investment.

TESLA MOTORS: THE EVOLUTION OF GOVERNANCE FROM INCEPTION TO IPO

ANTI TAKEOVER PROTECTIONS AND OTHER RESTRICTIVE COVENANTS

The company has adopted antitakeover protections that reflect its status as a relatively young technology company. At the time of Tesla’s initial public offering, the company had several provisions in place to reduce the likelihood of a hostile takeover.2 These include a staggered board with three classes of directors, authorization to issue “blank check” preferred stock without shareholder approval, limitations on the ability of shareholders to call a special meeting, advance notice of shareholder proposals for business conducted at shareholder meetings, and power of the board to postpone or cancel previously scheduled shareholder meetings. Although such provisions might be viewed as indicative of management entrenchment, they might also serve a legitimate business purpose by granting Tesla time to commercialize its technology without the threat of early acquisition by a competitor.

Tesla has also agreed to restrictive covenants as part of its external financing agreements. For example, the company’s financing agreement with Daimler grants that company favorable terms and conditions, including right of first refusal in case of a sale of Tesla and special contracts for production of parts. In addition, Musk has agreed not to transfer any of the shares beneficially owned by him to any other automobile manufacturer or to vote in favor of a proposed acquisition by an automobile manufacturer without Daimler’s consent. A $465 million loan facility by the U.S. Department of Energy also contains restrictive covenants. The 2009 loan facility provides that Tesla will be in default if Musk and certain of his affiliates sell down their ownership position by 35 percent prior to one year after completion of the company’s new Model S (which the loan facility serves to finance). 3 Together, these covenants further reduce the likelihood of an unsolicited change in control.

Larry

 

[Steph]

Sure, and one bit of bad news and the stock could plunge. Don't be so sure that it's an inevitability that it will only go up

In the long run I am extremely confident this company will be very successful. it would be a sad day for humanity to see it fail.

SpaceX, SolarCity and Tesla are changing the world, for real! Elon is not only dreaming, he doing it. I could not be more impressed.

As for the short term stock movements, who cares... Man will not be on Mars in a few quarter, EV will take some time to fully takeoff, short term thinking is for the greedy, not the visionary.

 

[Iamthecaliflower]

Couldn't agree more. I find it particularly interesting that the only thing driving this stock down is low volume. 1/10 normal volume seems to always cause Tesla to go down, but when volume is normal or when it comes in quickly, it causes a 5-7% spike. Very interesting. I really wish someone would share there thoughts on what is causing this unusual movement/ volume. I'm thinking funds accumulating around this level. Anyone have any idea?

 

[siry]

I think the spikes on high volume *have* to be certain funds exiting short positions that they entered into in the 20s. The thing that puzzles me is that the aggregate short interest keeps increasing. I think someone earlier posited that it could be old shorts exiting and new shorts entering at these higher levels.

 

[Fr23shjive]

I think the spikes on high volume *have* to be certain funds exiting short positions that they entered into in the 20s. The thing that puzzles me is that the aggregate short interest keeps increasing. I think someone earlier posited that it could be old shorts exiting and new shorts entering at these higher levels.

If you were a short it would make sense to buy at the 52-week high. I can see the point of view that the shorts are taking. We're a few months away from one of the most important moments for Tesla and the odds are stacked against them. If they fall behind schedule, if there are any small problems with the first Model S's, if the price of the model S is off, if they don't build the quantities they projected....etc. the stock could plummet. Any sort of bad press and the stock is taking a beating and the shorts are betting on it.

In the long run it's probably a bad bet but in the short term I don't think shorting the stock is a bad idea.

 

[daniel]

It may seem irrational to be prepared to pay $100,000 for a car from a startup company, but then have reservations about investing in their stock. However, I find that I probably don't have the temperament to invest heavily in a highly volatile stock. I’ll probably take your advice and buy some feel-good shares and call it a day.

Larry

I don't give advice. Only opinions. :smile: Whenever I buy or sell based on what I think the market is going to do, I lose. So I invest for the long term, mostly in mutual funds, where the buying and selling is either done by someone more savvy than I am, or based on an index. Or I buy bonds based on the research of a trusted broker, and with the intention of holding them to maturity, so it's like CDs, only without FDIC.

Buying the car but not the stock is not really irrational: The car is electric transportation, which I believe in and support, and it's a fun toy. I get to drive the car. Since the majority of cars never need repair, the car is likely to continue working fine even if the company fails. And as long as the company is in business, the car doesn't care what the stock price is. Finally, while an investor stands to benefit more from the stock, if it goes up, buying the car does more to support the company and to bring EVs to public notice.

Buying an IPO provides money to the company. Buying on the stock exchange does nothing to support the company other than the indirect effect of potentially raising the possible price of the next IPO. So a hundred grand invested in TSLA now really does nothing to further EVs, whereas buying their cars is what Tesla needs from the public if it is to be successful. They get both cash and public exposure (free advertising) when you buy their car.

But mostly, it's fun to drive. Unless you're a gambler, I don't think that stock is "fun" to own. Driving the car makes me smile. Owning risky stock gives me ulcers. As an owner of the car, I just have to hope the company stays afloat. As a stock speculator I'd have to hope the stock goes up.

I think my choice was eminently rational, given my proclivities, and the fact that at my age I am not investing for the future, merely holding investments for income.

Now, if Tesla put out a bond issue at an acceptable rate of interest, I'd trust them enough to buy a few.

I guess what I'm saying is that I trust the company, but not the vagaries of the market on an individual stock issue. Thus my 100 feel-good shares, which are just a footnote in my portfolio.

 

[gg_got_a_tesla]

Buying an IPO provides money to the company. Buying on the stock exchange does nothing to support the company other than the indirect effect of potentially raising the possible price of the next IPO. So a hundred grand invested in TSLA now really does nothing to further EVs, whereas buying their cars is what Tesla needs from the public if it is to be successful. They get both cash and public exposure (free advertising) when you buy their car.

Agree with the points you made as my investment behavior is along the same lines. A minor note on the highlighted bit though... a higher stock price may help keep good-Tesla-employees-with-stock-options locked in, happy and building better EVs for the future.

 

[Robert.Boston]

Let's not forget a company could quickly surpass Tesla if they happen upon a real battery technology breakthrough that they keep to themselves. Better, lighter, cheaper, higher power batteries would more than make up for a heavier less efficient motor.

Let's not confuse positions in the value chain. Car companies are not battery cell companies, nor vice versa. None of the likely suspects to build a quality car versus Tesla (e.g. Nissan, BMW, Ford) work on basic R&D in the battery space -- nor does Tesla. Any grand advances in battery technology will likely be sold to all comers.