Buy more stock before or after Aug. 7th?

[BornToFly]

Wow. I just discovered this part of the forum. I sold a property and have significant cash on hand that I want to invest in a lot more Tesla stock. I can't decide if I should do it before or after Aug. 7th? What are the odds that the stock price will go down after the earnings report? :scared:

Appreciate any and all opinions!
Thanks!

 

[uselesslogin]

Wow. I just discovered this part of the forum. I sold a property and have significant cash on hand that I want to invest in a lot more Tesla stock. I can't decide if I should do it before or after Aug. 7th? What are the odds that the stock price will go down after the earnings report? :scared:

Appreciate any and all opinions!
Thanks!

Hmm, the premiums are high but that is basically what buying a call is for when you're not gambling with it. You spend a few dollars on a call so that if the stock skyrockets you can buy in at the set price but if it goes down you can take advantage of the lower price.

 

[Richard_B]

Invest it in something more stable unless you have lots more to replace it with if the stock tanks (which may have nothing to do with the product or the success of the company). Look for something big, stable, and boring, preferably one that pays a nice dividend (dividends = free money quarterly, money that is taxed at a lower rate). Remember, the stock market is just glorified gambling. Would you take that nice pile of money you're going to have and put it all on no. 6 black or one more card from the shoe? Probably not. Be safe. Do research. Don't take risks.

 

[BornToFly]

I don't think investing in Tesla is the same as betting on 6 Black. There is good reason to believe Tesla will be successful as an automaker. I don't know if making 10x in ten years is possible, but I think 2-3x is a reasonable expectation. I would like to make an extra 10-20% by predicting what will happen Aug. 7th though....

 

[bonnie]

Invest it in something more stable unless you have lots more to replace it with if the stock tanks (which may have nothing to do with the product or the success of the company). Look for something big, stable, and boring, preferably one that pays a nice dividend (dividends = free money quarterly, money that is taxed at a lower rate). Remember, the stock market is just glorified gambling. Would you take that nice pile of money you're going to have and put it all on no. 6 black or one more card from the shoe? Probably not. Be safe. Do research. Don't take risks.

What if he's young and lots of earning potential ahead?
What if this new pile of money is only a small percentage of his investments?
What if he's already set for the future and this new pile of money is purely for speculative enjoyment?
What if he's just a risk taker at heart?

Here's my advice: We don't know what the stock is going to do. If you believe it ultimately will go up over the coming years, then what happens following immaterial. Hold it long-term and you will more than likely make a really nice profit, whether you buy before or after the Aug 7th earnings report.

If you're more interested in turning the stock ... well, take everything said here with a grain of salt. Lots of enthusiasts, sometimes not enough oxygen in the room .

 

[dha]

I am long Tesla. I have the vast majority of my net worth tied up in TSLA stock and LEAPs (long-term call options). I am optimistic about the earnings report and will stay exposed through the call and beyond, no matter what happens on the 7th. I am 25 years old and can therefore stomach high risk, short-term volatility and waiting years for my investment to pay off.

With that said, nobody can tell you with certainty what the earnings report next week and subsequent market reaction will be. If I were in your shoes, I might consider dollar-cost-averaging my investment over the next five days in order to average out the exposure to next week's news. Or, I might consider purchasing medium-term at-the-money call options to lock in a cost basis for the shares I am looking to buy.

 

[ToddRLockwood]

Get in before the 7th. Remember what Elon said recently, that Tesla has exceeded 400 carsweek, "and not trivially." In my opinion, they're going to blow right past expectations. The 21,000 estimate for 2013 won't even be close.

 

[MikeC]

If you're on a 10-year plan - get it in now. Save some money to buy on dips if you're worried it will drop.

 

[MartinAustin]

Do what I am doing... (well, this is what my plan is as of now) -

1) spend it all on TSLA on Monday August 5th. I believe the stock will continue to float upwards, especially with increased media attention each day as we approach the earnings news. (and who knows there could be some news out of Tesla, they certainly know how to control the media) I am already "all in" on TSLA and have no plans to sell just yet, so we will be at the same spot.

2) towards the end of the day on August 7th, if you are unconvinced about a guaranteed positive result to the stock, then sell half of it. I think it may be around $145 by the time the earnings come out. You'll have made 5% profit on that investment.

3) If the resulting change to the stock is up... we can assume the long-term path of the stock is still upwards, and I would buy it back - yes, you lost a little money, but you had some security in there for yourself.

4) If the resulting change to the stock is down... expect long-term folks to still insist that the stock will recover and rise again, while bearish folks scream that the TSLA sky is falling, it was always going to fall and there was never anything you could do about it... this earnings report was simply the trigger. You'll have a choice about whether to sell your remaining stake, at which point the 5% profit you made will ease the pain of the losses on the other half - or buy more TSLA, and if it does rise eventually, you'll see even more than 5% profit overall.

If you decide wait until August 8th, well, by then you'll simply have information I cannot guess at

I have to say though, my opinion has changed in the last few days. I was planning to sell half or all of it. I've been slowly moving towards a belief that the stock might climb August 8th. The recent Model S price increases are certainly heartwarming. So I might keep it through the whole period.

(40% of my net worth in TSLA)

 

[AudubonB]

Chiming in as one of the oldfart investors here - and by all accounts one of the very lowest AGI Tesla owners (or, rather, soon to be owner):

First, you say you are considering "investing in a lot more Tesla stock". That means that, first, you already have a position; ipso facto, your cost basis is considerably lower than the last closing price. I would suggest using your newfound liquid assets to add more - now, pick a dollar number. Call it $X. Take X/2 and set it aside until after 8/7, take the other 50% and buy it in either one or two tranches - I'd pick it up Monday at or near the opening bell. Pick up the other 50% after the 2Q release.

While my own position in TM is (1) the largest $ position in my portfolio and, after appreciation, the largest single position I've ever owned, and (2) represents very close to the largest percentage position I've ever held, nevertheless it still represents only about 8% of my equity portfolio and 2-3% of my net worth. I am constantly staggered and, I will say, dismayed, at reading how so many in this forum have put close to all their investment eggs in one basket. It just does not make sense, ever.

Let me state that in a gentler way: let's say you (such as you, Martin Austin - although I'm not picking on you specifically. You just happen to have the post prior to mine) are "right" about Tesla....whatever that means....but that the market is "wrong". What is going to happen to that 40% of your net worth?

 

[deonb]

Do what I am doing... (well, this is what my plan is as of now) -

1) spend it all on TSLA on Monday August 5th. I believe the stock will continue to float upwards, especially with increased media attention each day as we approach the earnings news. (and who knows there could be some news out of Tesla, they certainly know how to control the media) I am already "all in" on TSLA and have no plans to sell just yet, so we will be at the same spot.

2) towards the end of the day on August 7th, if you are unconvinced about a guaranteed positive result to the stock, then sell half of it. I think it may be around $145 by the time the earnings come out. You'll have made 5% profit on that investment.
...

Another variant of this. If the runup to Wednesday is only $145, do the above. In case it's higher (something like $150) do this:

Buy in on Monday August 5th like the above. Let's say you get in at $140 on Monday morning.
On Wednesday, instead of selling half, buy a August 9th $140 put - this should be around $10 if the stock is at $150.

That would be the equivalent to just buying the stock on Wednesday for $150, except that you would then be in a situation that you can't lose anything over earnings, and you have all the upside potential. You also have the downside potential of the equivalent of buying in after earnings if the price tanked after earnings.

You of course have to give up 7% of your earnings to get this privilege.

 

[confy]

Many of the members here, at least the vocal ones, seem to be expecting another(?) short squeeze. You might need something like that to justify the premiums on Sep or later calls. However, if you are indeed betting on the squeeze, it probably makes sense to wait for the earnings report. Any thoughts?

 

[BornToFly]

Sorry for the newbie questions.... Does the ER come out after the market has closed on the 7th? If so, does that mean that aftermarket trading could raise the stock price from say 140 to 160 before the market even opens on the 8th, forcing me to buy at a much higher price if the ER is positive?

 

[RABaby]

Sorry for the newbie questions.... Does the ER come out after the market has closed on the 7th? If so, does that mean that aftermarket trading could raise the stock price from say 140 to 160 before the market even opens on the 8th, forcing me to buy at a much higher price if the ER is positive?

It is a two way street. If the ER is less than stellar, the stock may tank - if only briefly. That will give you time to adjust your bid, or to hold off and wait for the price to settle at an apparent low. You can never be sure if the price has bottomed or topped out, but you also can't be sure if the report will be well-received or taken badly.

Most here believe the ER will be good enough to spur some rally, and if you agree, you should buy as soon as the price is acceptable to you but before the ER. If you have doubts, then you take your chances post ER. Those who trade options have more "options" on trading. For those of us who only trade the stock, we buy or sell based on our preferred analysis.

So if you rely on the analysis of others, be sure you read more than one report. There are no guarantees and if you trade long enough you will surely buy too high or sell too low more than once. Selling too low is annoying but it won't break you. Buy too high and you may never see that price again. That is very costly but I don't think that will be the case with TSLA.

 

[Jack6591]

The Mercedes S class is the automotive industry's gold standard. Mercedes Benz has refined the smallest of details year after year. They build an exceptional automobile.

The Tesla Model S is a better car.

Tesla Motors will disrupt the automotive industry, the utility sector, and the petroleum industry. The magnitude of this change will dwarf Apple's influence, Amazon's disruption of retail, and Google's influence of the Internet. The solar electric economy will change the entire world.

 

[Convert2013]

The Mercedes S class is the automotive industry's gold standard. Mercedes Benz has refined the smallest of details year after year. They build an exceptional automobile.

The Tesla Model S is a better car.

Tesla Motors will disrupt the automotive industry, the utility sector, and the petroleum industry. The magnitude of this change will dwarf Apple's influence, Amazon's disruption of retail, and Google's influence of the Internet. The solar electric economy will change the entire world.

I agree this is the direction we are headed. But there is always risk.

I'd use the proceeds of the property sale, keep enough to hedge and put down (20%) on an investment property of equal value of the total TSLA stock you are buying . That way if TSLA were to crash and burn or go down in value significantly you are protected long term by a totally different form of investment. You can play big in two areas, one high growth with risk, one moderate growth (zero risk when a renter is paying off your investment for you). This is what I've done.

 

[deonb]

Sorry for the newbie questions.... Does the ER come out after the market has closed on the 7th? If so, does that mean that aftermarket trading could raise the stock price from say 140 to 160 before the market even opens on the 8th, forcing me to buy at a much higher price if the ER is positive?

You could also buy aftermarket, after having read the report. But you're competing with professional traders who have teams of people and computers working the report within seconds and will purchase or sell before you have a real chance to re-act. The one thing that is a fairly level playing field is the conference call. But by that time most of the movement is priced in. It's still interesting to watch the ticker while Elon speaks though.

 

[marvinat0rz]

The Mercedes S class is the automotive industry's gold standard. Mercedes Benz has refined the smallest of details year after year. They build an exceptional automobile.

The Tesla Model S is a better car.

Tesla Motors will disrupt the automotive industry, the utility sector, and the petroleum industry. The magnitude of this change will dwarf Apple's influence, Amazon's disruption of retail, and Google's influence of the Internet. The solar electric economy will change the entire world.

The reason Tesla's stock has risen >250% recently, is that a lot of people are starting to realize that this is a significant possibility.

In my opinion, Tesla at the current valuation is one of the riskiest, most volatile stocks you could buy. Lots of potential both on the upside and downside. If you need to buy stock now, a very simple dollar-cost averaging is to buy 50% before earnings, 50% after earnings. It's a gamble no matter how you look at it. If Jackl1956's scenario ends up happening, it won't make a big difference when you bought the stock. If Tesla ends up getting tough competition and stabilizes on $40/share, it could make a 50% difference as to how much you'd lose.

I think the big thing to emphasize is that you are making a gamble, so make sure that you are aware of the risks you're taking. The stock fell 18% in a single day three weeks ago, on the news that Goldman Sachs upgraded its price target but not as high as the current share price. That's the kind of volatility we are talking about; it's entirely plausible that the stock will move 20% in either direction on this earnings report. More or less by definition, the current market value is the best bet we could make right now.

Tl;dr: Flip a coin, or invest half now and half on Friday. Make sure you are aware of the risk you are taking.

 

[DaveT]

You could also buy aftermarket, after having read the report. But you're competing with professional traders who have teams of people and computers working the report within seconds and will purchase or sell before you have a real chance to re-act. The one thing that is a fairly level playing field is the conference call. But by that time most of the movement is priced in. It's still interesting to watch the ticker while Elon speaks though.

I've been thinking about the possibility of buying aftermarket but you need to be really good at reading the Q2 shareholder letter right when it's released and making a very quick decision. Personally I think there are some people here that could read the Q2 shareholder letter more accurately than even most analysts and understand the ramifications perhaps even more deeply.

When Q1 earnings was released, I (as well as others here) knew within a minute the ramifications of the earnings report. I remember aftermarket jumped from 55 to 60 and then took a while (at least 30 minutes) to get up to the high 60s.

Anyway, on Wednesday I'll be reading the earnings report right when it's released and I'll be making a quick assessment if the report is blowout or not. If it's blowout, I'll be buying in the aftermarket right away.

 

[Convert2013]

I've been thinking about the possibility of buying aftermarket but you need to be really good at reading the Q2 shareholder letter right when it's released and making a very quick decision. Personally I think there are some people here that could read the Q2 shareholder letter more accurately than even most analysts and understand the ramifications perhaps even more deeply.

When Q1 earnings was released, I (as well as others here) knew within a minute the ramifications of the earnings report. I remember aftermarket jumped from 55 to 60 and then took a while (at least 30 minutes) to get up to the high 60s.

Anyway, on Wednesday I'll be reading the earnings report right when it's released and I'll be making a quick assessment if the report is blowout or not. If it's blowout, I'll be buying in the aftermarket right away.

Remember earnings report by itself is part of the equation. What Elon says during the call is pretty important too as it may contain forward looking information. I for one am on a holding pattern. No more infusion until Q2 results are out for me ;-) Good luck to you and hope you are successful.