Papafox's Daily TSLA Trading Charts

[Fact Checking]

So far, Elon's tweets have been provocative, but not irrational. He wants to point out that short-selling is hurting not only Tesla but investors in general and the SEC is way too tolerant of short-seller behavior. Fair point, but holding breath that we don't get into a pissing contest with bureaucrats who have the ability to inflict lots of pain.

That's true, but note that Elon speaking clearly about the settlement was a necessary investment into the future of Tesla: once the final judgement is ratified by the judge he will be muzzled, probably for the rest of his life. If opponents bring up the SEC case supporters can point to Elon's very clear opinion about the whole matter - and the thing is, Elon is right.

And yes, young people of Gen Y (and even Gen X) widely considered Elon's tweets to the SEC as a fine act of "epic trolling".

Positive Tesla image with the next generation of new car customers secured, for 20 years.

I also saw the timing and content of the tweets and thought that they were calculated, he wasn't lashing out in anger like when he was trolled in the Thai rescue. His points about short sellers being a net harm to the economy were well articulated and to the point, and exposed and highlighted the damaging public policy mistakes the SEC has shown in enforcing the rules only in favor of shorts.

If we accept Elon's argument that shorts are a net/aggregate harm to the U.S. economy (which analysis I agree with) then we can even say that the SEC acted against the public interest and against its statutory mission of protecting investors: the SEC's actions were hurting Tesla shareholders and helping Tesla anti-shareholders. I.e. the SEC's actions were not just bad policy, but explicitly unlawful. All that Elon did was to try to protect Tesla shareholders, and this by mathematical definition hurts Tesla shorts: what is good for Tesla shareholders is bad for Tesla anti-shareholders.

Of course this is not a fight Tesla should take upon itself in such a critical period of its corporate history - and that exposure and threat of collateral damage is what enabled the SEC to blackmail them into a settlement to begin with...

But I think it was absolutely necessary for Elon to talk about this, to maintain long term brand image, and it was probably worth the ~$20 drop. We'll see over the next couple of weeks...

 

[neroden]

Yeah. Also note that Q4 ER will provide an outlook for how Q1 cash flow is going to look like. Here's the prospectus of the March 2019 notes:

424B5​

"The 2019 notes will mature on March 1, 2019"
​

I.e. Tesla will have the benefit of at least 50% of the cash flow of Q1 2019, plus the cash flows of Q3 and Q4 2018.

If we take @luvb2b's projections as a rough (conservative) baseline for Q4, not counting much expansion over Q3:

q2-q4 2018 financial projections​

Then Q3 cash flow is +$632m, Q4 cash flow is +$541m, but that is burdened by a -$400m debt repayment outflow. So the real cash flow in Q4 would be more like in the $900m range, which would be projected onto Q1. So even if Q1/2019 has the same performance as Q4, 50% of that cash flow (January/February are the slowest months of the year) is still +$450m.

That adds up to real money: $632m+$541m+$450 = +$1,623m surplus cash by March 1 2019, which should be more than enough to cover $920m debt repayments...

There's a number of headwinds and a number of tailwinds possible, but I don't think it should be tight in any way.

It's all gated on the Q3 cash flow characteristics though, so that's going to be a very interesting read!

I caution that luvb2b may have overestimated Q4 gross margin. I'm not entirely sure on the methodology there, but it may be hard for Tesla to achieve 22% GM immediately (it may take longer than Q4). If we assume a lower gross margin on Model 3, it could knock almost $200 million off the cash flow in Q4 (and likewise Q1). Still, that would be plenty of cash flow to pay off the bonds. Accounts payable may decline as capex is paid for, but there's still plenty of cash for that as well.

 

[Fact Checking]

I caution that luvb2b may have overestimated Q4 gross margin.

Three reasons why I think @luvb2b's higher gross margin for Q4 is justified:

• The very high AWD take rate: still over 80% I believe, according to the latest VIN registrations in the last 2 days. AWD with its 50% gross margin and $6k price increases the per unit gross profit by about 4% (!).
• Both EAP and FSD take rates are increasing. Both are 100% gross margin options, so they increase gross margins even more. EAP take rate is now above 80% as well - and the quarterly safety stats, the 2 weeks trial period and the V9 release will only help market it.
• In Troy's Model 3 tracker ASP is still increasing: at around $61,700 for Q4 currently ... The higher the ASP the better the gross margin, as all the extra options have much higher gross margins than 20%. Here's the tracker, click on the 'Survey' tab to see the current option take rates, ASP measurements and estimates. (Warning: these are statistically less reliable than his production estimates.)

Neither of these factors were known when the original 15% and 20% gross margin guidance was made by Tesla. As you yourself pointed it out a couple of weeks ago Tesla under-estimated AWD take rate and that made drive unit production a bottleneck.

 

[oneday]

Three reasons why I think @luvb2b's higher gross margin for Q4 is justified:

• The very high AWD take rate: still over 80% I believe. AWD with its 50% gross profit and $6k price increases the per unit gross profit up by about 4% (!).
• Both EAP and FSD take rates are increasing. Both are 100% gross margin options, so they increase gross margins even more. EAP take rate is now above 80% as well - and the quarterly safety stats, the 2 weeks trial period and the V9 release will only help market it.
• In Troy's Model 3 tracker ASP is still increasing: at around $61,700 for Q4 currently ... The higher the ASP the better the gross margin, as all the extra options have much higher gross margins than 20%. Here's the tracker, click on the 'Survey' tab to see the current option take rates, ASP measurements and estimates. (Warning: these are statistically less reliable than his production estimates.)

Neither of these factors were known when the original 15% and 20% gross margin guidance was made by Tesla. As you yourself pointed it out a couple of weeks ago Tesla under-estimated AWD take rate and that made drive unit production a bottleneck.

Also, even if margin is high I think his deliveries numbers are conservative and I think we will see a model s&x asp bump. All of this could offset a lower gm.

 

[Fact Checking]

Also, even if margin is high I think his deliveries numbers are conservative and I think we will see a model s&x sap bump. All of this could offset a lower gm.

So his Q4 S+X delivery numbers are 28,000, and here's the historic S+X delivery track record:

2016/Q3 => deli(S+X) = 24,500
2016/Q4 => deli(S+X) = 22,200
2017/Q1 => deli(S+X) = 25,000
2017/Q2 => deli(S+X) = 22,000
2017/Q3 => deli(S+X) = 25,930
2017/Q4 => deli(S+X) = 28,320
2018/Q1 => deli(S+X) = 21,800
2018/Q2 => deli(S+X) = 22,300
2018/Q3 => deli(S+X) = 27,660

So the historic max is 28,320, not much beyond the current @luvb2b estimate. While 29,000 would be plausible, I'm not sure there's much room upwards - plus increasing Model 3 production will continue to strain the delivery system.

Also note that the annual 18650 production is around 100k units, which leaves 28,240 for Q4. In 2017 they delivered 101,250 Model S+X, and it's conceivable that Panasonic can slightly increase production in their existing plants with no capex cost, that leaves a bit of a room upwards: up to 29,490 S+X deliveries if we stretch the historic track record to its maximum.

There's some headwind though for S+X deliveries:

• The reports about end of quarter S+X inventory trimming showed very aggressive measures, which would have moved some Q4 demand forward. But Q4 being the strongest quarter of the year maybe this won't matter.
• The Model 3 Performance is pretty popular, and this likely consumes demand from the lower battery size Model S sales, shifting average battery size up. But this has the consequence that the "100k limit" will turn into a 98k limit or 97k limit, as the real limit is the number of 18650 cells Panasonic can make, not the number of S+X cars Fremont can output. The maximum manufacturing output of Fremont is probably around 30,000 - but probably not in Q4 which ends with a holiday slowdown.

Anyway, while I agree that 28,000 is probably conservative, it's not far off and very close to the guidance, which is a safe place to be prior the Q4 delivery report.

 

[Papafox]

We knew that today wasn't going to be pretty after Elon's taunt to the SEC in after-hours trading yesterday, and it wasn't. Combine the taunt with bad macros today and we saw TSLA lose 7% today. By comparing TSLA to the other top two shorted companies in the U.S. right now, Apple and Amazon, we can see how these shorted companies responded to the day's pressures and compare them to TSLA. Notice in all three cases, bad macro caused the deepest dips around 1:30pm today. Two noteworthy observations come forth. The TSLA dip was considerably higher than the other two dips, suggesting that the TSLA dip was a dip on steroids in which short-selling augments the macro dip to yield a much deeper dip. This is what is known as a dip on steroids. Secondly, both Aapl and Amzn recovered most of the day's losses in the afternoon, but look at TSLA where selling held the stock down near the day's low until just before close.Thus we saw a STICKY DIP ON STEROIDS today, which is a flagrant form of stock manipulation because it is designed to cause other traders to buy or sell, rather than being just a straight bet on TSLA's future trading direction.

Apple closed down 1.6% today on general market pressures

Amazon closed down 1.2% today on general market pressures

The good news is that the price you see TSLA selling for is a manipulated price which will get undone once the present worries dissipate. The bad news is that we can't say exactly when those concerns will dissipate because there's always the chance of Elon doubling-down on his taunt to the SEC yesterday. The good news is that we know that 3Q ER will show hundreds of millions of dollars of free cash flow. Other good news is that analysts are starting to talk about the incredible cash flow Tesla is generating now and will generate in the future.

Former TSLA uber-bull James Albertine spoke with Bloomberg today and said in this video that Model 3 will bring "on the order of 4 or 5 billion dollars in the next 12 months, strictly from Model 3". Someone with credibility is at last saying it! The irony here? The title that Bloomberg gave to the video was "Tesla Analyst Finds Elon Musk 'Destructive' to the Stock." Think about that. Albertine pulls away the veil, shows that Tesla is going to generate many billions of dollars in the not so distant future, and Bloomberg hides this revelation under a negative title that is not news at all. Albertine has previously been critical of Musk's behavior. So, Bloomberg uses the negative non-news as the title in order to hide the incredibly positive news that Tesla is turning hugely cash flow positive. Sigh.

James Albertine video on Bloomberg

Shorts did 73.29% of TSLA selling today.

Looking at the tech chart, we can see a situation very similar to last Friday's, where TSLA closed below the lower bollinger band. As with last Friday, I don't expect it to remain below the lower bb unless there's additional news. BTW, TSLA rose to 316.xx this week before retreating to the lower bb again. We know this stock is capable of moving up just as quickly as it moves down.

For the week, TSLA closed at 261.95, down 2.82 from last week's 264.77. As you remember, Friday was the day TSLA tanked last week due to word of the SEC suit against Elon. It's amazing that the gains on Monday were entirely eroded by negative macros, FUD, and Elon's latest tweet. For the weekend I suggest you find balance with Albertine's prediction of 4 to 5 billion in positive cash flow over the next 12 months. Try to picture where TSLA will be after that. Enjoy your weekend.

Conditions:
* Dow down 180 (0.68%)
* NASDAQ down 91 (1.16%)
* TSLA 261.95, down 19.88 (7.05%)
* TSLA volume 17.8M shares
* Oil 74.75, up 0.42 (0.57%)
* Percent of selling by shorts: 53.29%

 

[Papafox]

Just bought a J20 call.

 

[Papafox]

Correction from last Firday's post: the correct percentage of TSLA selling by shorts was correctly listed twice as 53.29% and once incorrectly as 73.29%.

Today was the second day in a row of shorts playing the sticky dip on steroids manipulation. Yesterday, TSLA still may have experienced some negative fallout from the "Short-seller Enrichment Commission" tweet by Elon, but today's market trading was largely free of substantial news. Today was classic example of sticky dip on steroids.It was a "dip on steroids" because short-selling deepened the dip far more than it would have gone otherwise, and "sticky" because the shorts set out to cap the SP at 250. They lost a few dollars of the cap, gained it back, and then lost just prior to the close. I continue to believe that the apparent shorting (judging by shape of trading chart vs. news today) is under-reported and that it is higher because of shorting on exchanges not monitored by FINRA.

The NASDAQ bottomed out about 1pm and made a strong comeback in the afternoon. Other tech stocks followed the NASDAQ up, but not TSLA. How could it with shorts selling to cap at 250 and create a "sticky" out of the "dip on steroids".

Just after close of trading, Macquarie Capital initiate coverage of TSLA with an outperform rating and a 430 price target. Shorts had already been having trouble holding TSLA below 250 and the new and optimistic coverage was the sign many investors needed that TSLA may have bottomed out and begun the long climb upward. A $5 climb in after-hours trading is very significant. Tomorrow may be a battleground as shorts try to show after-market trading was just a fluke and longs on the sideline, who must already be chomping at the bit to get back into TSLA, try to grab shares. The most likely MMD will be a short session of buying into the green and then the heavy hand of the shorts trying to sink TSLA into the red. If it doesn't happen, or it fails and TSLA runs back higher into the green, then it's a chance for off to the races.

Apparent shorting was high today, suggesting that some of the shorting has moved to exchanges not monitored by FINRA in order to hide the level of shorting. Notice that Dusaniwsky is on vacation, which further masks the shorting activity. Reported selling by TSLA shorts today was 54.29%

You may have notice my quick post that I had bought a J20 leap late this afternoon (actually, seconds before it jumped above 250, whew!). I like to post real time about buying or selling so that I don't become one of those internet experts who always says he buys at the lows, sells at the highs, and defines himself as a trading genius. That's not me. Here's my reasoning for buying a single leap. I have been holding off doing any buying both because of the ferocity of the short-selling (it is much higher than the FINRA data suggests, judgjng from the daily charts) and the question mark of whether Elon and the SEC will put the letter together and get it off to the judge by October 11. If that effort fails, then we have lower to go. Nonetheless, we're visiting the lows we've seen this year (240-somethingish) and unless something horrible happens (it could), we're so close to the bottom that I think doing a portion of my final buying here. Thus the single leap rather than multiple.

The tech chart I like to use is not available at the moment. I will post when it is, but I have two points. First, the lower bb could not hold TSLA from going lower today due to the apparent high short-selling, the bad macros in the morning, and the uncertainty of whether Elon is truly on board with the SEC settlement. I do think the historic lows of the year are going to be far more supportive than the lower bb was today, however.

Hang in there, my friends. As long as Elon doesn't surprise us, the turnaround is near or already upon us.

Conditions:
* Dow up 40 (0.15%)
* NASDAQ down 53 (0.67%)
* TSLA 250.56, down 11.39 (4.35%)
* TSLA volume 18.1M shares
* Oil 74.24, down 0.10 (0.13%)
* Percent of TSLA selling by shorts: 54.29%

 

[Papafox]

This will be a short report as I am rushing to get a Tesla-related article completed and published tonight. Will link to it as soon as it comes up.

Yesterday's announcement of positive price target and beginning coverage by Macquarie Capital right after market close turned out to be the catalyst the market needed to turn TSLA's trajectory around. The stock was priced seriously low in terms of bollinger bands, historic lows, and likelihood of good trading ahead, and this small announcement set the market to buying in after-hours trading.

Looking at today's trading, you can see the small mandatory morning dip right after open that was quickly defeated (no surprise), then you can see the methodical walking down of the SP from about 9:40am to 9:55am (also no surprise), but the quick defeat of that second dip pretty much sealed the fate of the shorts today and it was off to the races. Notice that short percentage of selling was higher today than yesterday. Starting at about 2:43pm and going for about an hour after that, the shorts managed to successfully walk the stock price down a bit and made some money on that play if they could cover by day's end (93,000 shares traded in final minute suggests some covering then).

Take a look at after-hours trading, though. Though on a smaller scale than yesterday's climb, we saw some nice climbing during after-hours trading, which suggests there's buying fever in the air and bodes well for tomorrow. That $2 climb in after-hours trading to $264.88 brings TSLA within spitting distance of 265, a nice setup for tomorrow.

Shorts did 56.43% of TSLA selling today. It's unusual to see a high level of selling on a big green day because such days are typically money-losers for day-trading shorts.

Still no joy on the tech charts I prefer.

Looking forward to tomorrow's trading.

Conditions:
* Dow down 56 (0.21%)
* NASDAQ up 2 (0.08%)
* TSLA 262.80, up 12.24 (4.89%)
* TSLA volume 13.1M shares
* Oil 74.67, down 0.29 (0.39%)
* Percent of TSLA selling by shorts: 56.43%

 

[Papafox]

Just published on CleanTechnica. Today's report will be delayed for a while as I work with comments.
A Field Guide To Potential Securities Violations By Tesla's Foes — In Depth | CleanTechnica

 

[avoigt]

Just published on CleanTechnica. Today's report will be delayed for a while as I work with comments.
A Field Guide To Potential Securities Violations By Tesla's Foes — In Depth | CleanTechnica

Great job.

It was overdue to summarize what happened so far in a systematic way and I strongly hope that the SEC looks into that issue asap and finally start to get to work with what they have been founded for.

 

[Fact Checking]

Shorts did 56.43% of TSLA selling today. It's unusual to see a high level of selling on a big green day because such days are typically money-losers for day-trading shorts.

It's almost as if shorts knew that today the price would drop.

And drop it did, sharply, after news of new proposed legislation was released just before market open:

A bill has entered Congress to end the $7500 tax credit for EV owners and charge them a fee instead : teslamotors

This bill, which will likely die in committee, caused anxiety amongst investors - as the high comment count in the Reddit thread is showing. The price dropped sharply in early trading.

Was there unlawful coordination between the "lucky" shorts who capped yesterday's TSLA rise, and Senator John Barrasso or his staff?

Coincidentally, the top two donors of Senator Barroso are the financial industry and the oil industry.

 

[AZRI11]

It's almost as if shorts knew that today the price would drop.

And drop it did, sharply, after news of new proposed legislation was released just before market open:

A bill has entered Congress to end the $7500 tax credit for EV owners and charge them a fee instead : teslamotors

This bill, which will likely die in committee, caused anxiety amongst investors - as the high comment count in the Reddit thread is showing. The price dropped sharply in early trading.

Was there unlawful coordination between the "lucky" shorts who capped yesterday's TSLA rise, and Senator John Barrasso or his staff?

Coincidentally, the top two donors of Senator Barroso are the financial industry and the oil industry.

Great info Elon, oh I mean Fact Checking.

 

[Papafox]

Looking at the pre-market trading, you can see that enthusiasm carried over from yesterday's after-hours trading, but everything changed after opening. A Wyoming Senator proposed a bill to eliminate the federal tax credit for EVs and to also tax EVs because they pay no gasoline taxes. My take is that this news can work as an excuse for a dip on steroids where shorts are adding to any dip, but I just can't see too many longs selling because of an attempt at a law change by one senator. First, Tesla is nearly through the full credit now, and eliminating the credit would actually help Tesla because it would deny other EVs the same assistance in reaching profitable quantities of vehicles produced. Secondly, that proposal will likely die in committee and never become law.because it has the feel of "sour grapes" legislation from a senator whose state has some oil and lots of coal production.

My guess is that this was an excuse for a dip on steroids by short-sellers who really wanted to get the SP down and then exit. You can see lots of selling to get TSLA below 250 and then lots of volume before noon as (my guess) shorts tried to exit and the SP quickly ran up on them. Clearly, longs were willing to buy at the lows, didn't show a great deal of fear, and the shorts got on the defensive. What's really interesting is what TSLA did for the remainder of the day.

The NASDAQ chart shows steady dropping that picked up intensity going into close today.

One of the buyers today could have been T. Rowe Price. They just disclosed a large holding in TSLA again. The company lightened their shares when prices were high and now they're adding while it is low. Smart.

In any event, TSLA held up remarkably well today, considering the market. Today was the third biggest loss for the DOW in history (in points) as interest rate and trade war concerns heat up and earnings start cooling down. The NASDAQ lost more than 4% of its value today and stocks such as Nvidia, Apple, and Amazon lost between 4.6% and 7.5% of their values today. For TSLA to drop 2.25% was a real show of strength.

Part of that strength can be explained from TSLA already being not far from yearly lows, good news is likely on the horizon with Q3 earnings report, the stock demonstrated yesterday it will bounce when sold under 250 and demonstrated it again today. Further, there's likely going to be a successful letter sent to the judge which will likely lead to the SEC settlement that will send TSLA higher. That letter is due tomorrow, Oct 11. In my CleanTechnica article, I emphasized the need to settle with the SEC and Elon gave a twitter LIKE to that article today, suggesting he agrees.

Tomorrow could be another brutal day for the macros, so keep the seatbelts fastened. The SEC settlement could be resolved soon and when it is there will be even more need for shorts to cover.Thus, once again I can say better days lay ahead.

Shorts did 59.75% of TSLA selling today today, suggesting they were busy producing a dip on steroids this morning

Conditions:
* Dow down 832 (3.15%)
* NASDAQ (4.08%)
* TSLA 256.88, down 5.92 (2.25%)
* TSLA volume 10.5M shares
* Oil 72.24, down 0.93 (1.27%)
* Percent of TSLA selling by shorts: 59.75%

 

[Papafox]

The SEC and Elon's attorneys have submitted the settlement letter to the judge and there's little detail contained on the Musk side other than he's willing to settle because it's the best thing for Tesla's shareholders. That's the best possible answer. For this reason, there should be little reason to doubt that the judge will approve the settlement and it will be behind us.

With this behind us, I'm feeling good about Tesla just as long as macros settle down a bit. A big possible dread has disappeared for shareholders, which suggests to me that shorts will have a more difficult time pushing the SP down from here. They're going to try, and a mandatory morning dip that gets defeated and turns into a nice green run-up would be an excellent way to undo today's losses and start the long climb back up.

 

[Stormy]

The SEC and Elon's attorneys have submitted the settlement letter to the judge and there's little detail contained on the Musk side other than he's willing to settle because it's the best thing for Tesla's shareholders.

Great news. What's the source? I cant find details about this anywhere.

 

[ggr]

I think a better outcome would be for the judge to reject the settlement and dismiss the case entirely. But I very much doubt that will happen.

 

[Papafox]

Great news. What's the source? I cant find details about this anywhere.

It's a little late, but here's one source of the story and a reproduction of the letter:
Tesla, Elon Musk, and the SEC file to seek approval of the settlement despite short trolling

 

[Papafox]

Today was the second day in a row of a more than 500 loss on the Dow and a down day for NASDAQ as well. Looking at TSLA's performance compared to other tech stocks, though, and looking at its after-hours performance, TSLA showed strength for the second day in a row. TSLA strikes me as a stock looking for an excuse for a rally. If the macros turn green tomorrow, I would expect TSLA to have a good day. For comparison purposes, NVDA closed down 4.30%, AMZN down 2.04%, and AAPL down 0.88%. While the techs led yesterday's dip, they moderated somewhat today. If the market is making a correction, being near a stock's strong support level near the bottom of the yearly range is not a bad place to ride out the storm.

In opening trading, TSLA traded higher in two bursts, but I've grown suspicious of any rallies that can't be sustained beyond 10:30am and have come to do my buying later in the day, due to the very substantial efforts of the short-sellers looking for a better exit point prior to the Q3 ER. Shorts were reloading to create their mischief today, and counting both the first and last minutes of trading they bought 350,000 shares in these one minute stretches.

Regarding yesterday's announcement that the SEC and Elon have sent the letter to the judge and there's nothing earth-shaking in the letter, we can pretty much assume that the settlement will be a done deal. Once again, I think we're a bit ahead of the market. The market will react when the judge gives her stamp of approval to the agreement, and by then you and I will be at max gross weight with stocks and options.

TSLA shorts did 57.42% of the selling today, down a couple percentage points from yesterday. I would say the lower percentage of selling suggests shorts are getting tired of their efforts to push TSLA below 250.

I'll be looking to pick up a couple more leaps tomorrow if the macros look like they've finished the worst of their drops. I'd be hard pressed to think of a time when the downside risk looked so pale compared to the immense upside opportunity we see right now.

My favorite charting site is still down, and this weekend I will look for an alternative if it is still not fixed.

Conditions:
* Dow down 546 (2.13%)
* NASDAQ down 93 (1.25%)
* TSLA 252.23, down 4.65 (1.81%)
* TSLA volume 8.1M shares
* Oil 71.09, up 0.12 (0.17%)

 

[Papafox]

A quick correction to the story above. Some 350,000 shares traded in the first and last minutes of trading today. Shorts didn't do all of that buying, of course. I suspect they did a good chunk of it, however.

Also, here's the latest chart from Dusaniwsky, indicating that TSLA short interest has not changed significantly the past week.