TSLA Market Action: 2018 Investor Roundtable

[J X 3]

Not arguing for or against anything here. but I wanted to bring up a possibility that I have never seen anyone make. Why do we assume S/X will always be pegged at 100K/Y? With Tariffs eventually being phased out in China and maybe even lowered in Europe (If Trump can pull it off.) My latest theory is that Tesla can double S/X production and will come out with an S/X 120D using 2170 cells while getting rid of the S/X 75D and keeping the S/X 100D using 18650 cells though at 2x the volume. This will help them leverage Panasonic to the fullest and allow them to migrate to 2170 over time for S/X. I have no idea on the timing, but the best timing would be now with the tax credits phasing out with the biggest credit gone by years end. But regardless of US tax incentives, the China market will explode if tariffs drop $10k per car. This will have the effect of doubling or even tripling the size of the market for Tesla in China. I obviously thought this was a better theory a few weeks ago when trade talks looked positive and Xi was talking about lowering barriers. But I still think much of the current trade war stuff is bluster and all sides will come to a fair deal where tariffs and barriers in general are lower for everyone.

I was keeping it simple so I don't end up with a book on Tesla.
S&X can grow but can also tank. The high end is easier for competitors and Tesla needs to improve interiors, sustained perf, X could use a substantial face lift and preferably if it's as soon as next year. The new cells would require a substantial redesign but likely they want to do that and be able to go above 100kWh. They could also add a new high end model , something like the Lagonda Vision would be great. They need something like that sooner or later, at least for car as a service.
M3 and MY will cannibalize sales to some extent too, even if Tesla claimed the opposite in the early stages but M3 goes from 35k to 78k+8kAP so quite high.
China, don't know how large the market is for the segments, what kind of share they have and how their prices compare to others. I do know that China prices have dropped already so we would see an impact right away. They likely get asked about it when they report Q2 so maybe we get some info.
Overall I'm happy if they manage to stay at 100k and i'll adjust my expectations if they do any major updates.

Almost forgot, they need a battery upgrade to take advantage of Superchargers V3, they can't leave the high end being slow to charge but remains to be seen if the current M3 chemistry is good enough or they need next gen.

 

[J X 3]

about 3 weeks should simply mean the units shipped press release at end of Q2 so I would not read it as anything else.

 

[bdy0627]

Oooohh, burn!

Ok, this is such a fun time to be a TSLA investor! I honestly don't know why Elon is so confident about a massive short squeeze in "about" 3 weeks. But, he is putting it out there for everyone. Clearly, he is ultra confident it is coming very soon. I'm not so sure 6,000/week would do it, nor am I at all convinced they will get to that level in just a few weeks. It would help, but that doesn't seem to be the short thesis anymore, that Tesla can't mass produce the model 3. China factory? Maybe, if it involves a big infusion of capital. Last time, Tencent bought a bunch of stock. So, if they agreed to the purchase of "x" number of shares by whatever date as part of the agreement, I think that could probably do it. There just isn't enough stock to go around anymore, is there? But then, wouldn't he still potentially be liable for insider trading? If he has been buying shares lately, potentially based on that kind of insider info, that's got to be a no no. So, that makes me think it's not that. Still, with Elon's level of confidence on this, along with a very short timeline, makes me think there is something financially coming that will trigger it. It can't just be production, right? Hmmm...

 

[dmvevguy]

Ok, this is such a fun time to be a TSLA investor! I honestly don't know why Elon is so confident about a massive short squeeze in "about" 3 weeks. But, he is putting it out there for everyone. Clearly, he is ultra confident it is coming very soon. I'm not so sure 6,000/week would do it, nor am I at all convinced they will get to that level in just a few weeks. It would help, but that doesn't seem to be the short thesis anymore, that Tesla can't mass produce the model 3. China factory? Maybe, if it involves a big infusion of capital. Last time, Tencent bought a bunch of stock. So, if they agreed to the purchase of "x" number of shares by whatever date as part of the agreement, I think that could probably do it. There just isn't enough stock to go around anymore, is there? But then, wouldn't he still potentially be liable for insider trading? If he has been buying shares lately, potentially based on that kind of insider info, that's got to be a no no. So, that makes me think it's not that. Still, with Elon's level of confidence on this, along with a very short timeline, makes me think there is something financially coming that will trigger it. It can't just be production, right? Hmmm...

I was a bit nervous earlier this weekend, but after Elon's tweet I'm super bullish lol. I'm guessing it's a combo of the 5k M3 ramp AND China GF!

 

[ruralectric]

Re "radical change": Folks seem to be interpreting this as a task that's going to be really difficult to implement. It may simply mean that they have some task or tasks that need to be implemented very differently than current methods. A radical change need not necessarily be a difficult one, especially if they've already figured out what needs to be done.

 

[EinSV]

In about 3 weeks, we could have the 2Q production letter with something along the lines of:

• production confirmed at ~4500/week
• 5K/week expected in ~2 weeks
• ramp expected to continue to ~6K/week by sometime before end of Q3
• Model 3 P/Dual Motors production ramping nicely
  
• Strong re-confirmation that Tesla expected to be sustainably cash flow positive and profitable starting in Q3 and increasingly so as the ramp continues

In the next month or two, we could also have:

• GWh scale TE project announcement
• China GF announcement

All of these are already known/announced, but in the current environment are discounted heavily, especially by shorts.

With many shorts already under significant pressure from the SP rise from ~250 to ~360, plus (hopefully) more pressure to come between now and early July, it's not hard to see why Elon is predicting it will get very unpleasant for them.

 

[bobinfla]

Oooohh, burn!

Seriously Elon? How can you do this to me? Way back when, I bought some shares. Then I kept buying every time I had some spare dough, and finally decided I was done. But then I had to buy on a dip, because it was too tempting and I couldn't resist, and then I said I was really done. Then there was another dip and I got tempted and did it again. And again, and again, and a bunch more. Then last time I said I was really, really, really truly done once and for all, and I was just going to sit back and watch the climb that I know is coming over the next year or whatever.

THEN YOU TWEET THIS!

A man can only resist so much temptation. But really, this is the last time, I swear it!

 

[neroden]

So, under rule 10b5-1, an insider isn't supposed to trade on material non-public information "in breach of a duty of trust or confidence". Is it possible to trade on material non-public information without breaching a duty of trust or confidence? Seems to me it is, if you are an insider and you offer everyone else a chance to copy your trade, which is the basis of the Form 4 disclosures. But despite that, I think we should assume that Musk doesn't have any material non-public information at this point, especially since *everything at Tesla leaks instantly* and he's said so. Of course, he's still allowed to trade on material public information, even if most people haven't noticed it, or on non-material non-public information.

 

[J X 3]

They might say that they target around 6.5-7k by end of Q3 but unlikely they mention margins.
That's the most likely positive news.

 

[wipster]

I was a bit nervous earlier this weekend, but after Elon's tweet I'm super bullish lol. I'm guessing it's a combo of the 5k M3 ramp AND China GF!

I would recommend that everyone read Elon's "short explosion" tweet in context. It was one of several replies to Fred Lambert and an old question from @SwiftOnSecurity. Might shed a bit more information on several items including the "tent." Pretty interesting.

 

[Curt Renz]

On May 4 Elon warned of the short burn of the century. He allowed time to let message to sink in, as he waited more than a month after that to make his share purchases following what was already a significant share price increase. The details of those purchases were made public almost immediately after they occurred. They signal confidence to shareholders. He owes nothing to short sellers, nor does the SEC expect him to. It’s the selling of shares that might raise suspicion of concerns by an insider. That’s certainly not the case here. Today Elon again gave the short sellers fair warning. It's now up to them to decide whether to heed it.

 

[Zhelko Dimic]

Oooohh, burn!

Oh, Elon, Elon, Elon...
I wish I could trust you, I really wish...
I am 114% TSLA and yet, 28.3% is cash sitting on the sidelines...
But I've been burnt so many times by you Elon...

No, I'll sit this one out with only 114%.

Yours truly,
Weak Long

 

[Starno]

I don't think it's necessarily the fact that they achieve their production rate target by itself that will make the shorts cover.
It's rather that meeting their production target will give investors confidence, and new " large " investors will come in, and current ones double down.
Pushing the SP at levels that will get tons of shorts to get margin called, leading to the short squeeze.

 

[dandurston]

Short Squeeze Potential Causes
I don't think a short squeeze will be caused by Tesla realizing goals that have been long since announced/expected. Tesla reaching 5k per week isn't going to do it - everyone already expects that. Nor is a China GF, reiterating Q3 profit etc. A short squeeze would only be trigged by unexpected, hugely positive news, or a genuine share shortage (a la Volkswagen).

The latter share shortage possibility doesn't look likely to me. Someone huge like Google could have been snapping up shares like crazy over the past quarter (hence the recent massive rise which frankly has seemed a bit unjustified) and that will be disclosed in 3-4 weeks. Perhaps Google or Apple have bought so much TSLA that <40 million shares are available, but that's seems extremely unlikely to me.

So I think Elon is referring to some unexpected and hugely positive news. Some possibilities here are:

1) New Generation Model S Going Into Production Now
Elon could unveil an amazing next generation of the Model S with production starting in a few weeks. There have been some clues this might be in the works. However, this seems just as likely to tank the shareprice as cause a squeeze. This would raise worries about production delays and margin on the new product etc. It would put a lot of Tesla's stable, profitable product at risk. So Elon could be very excited about this and may have this in mind, but it seems just as likely to tank the share price.

2) Profitable Q2
This would be huge and unexpected. If Tesla shows a profit for Q2, the forward looking profit expectations and thus share price would shoot up massively. It seems impossible, but there is a tiny chance. Tesla has been losing tons of money due to hugely negative margins on M3. It's possible at the Q2 rate of about 2000/wk on average that the M3 is break even. So instead of losing hundreds of millions via negative margins, we get no loss from M3, improving the overall picture by hundreds of millions. This, combined with improvements elsewhere in the business (S + X have been ~2500/wk lately), less negative margins on energy etc, might be enough to bring Tesla to the black. I doubt it, but maybe. If they accomplished this it would erase capital concerns and massively boost the share price.

3) Other Possibilities
FSD across country drive - unlikely to occur, unlikely to cause a squeeze if it did occur
China paying for Tesla's new GF - might occur, nice boost but not a squeeze.

 

[JRP3]

FYI, I posted this Elon tweet earlier and it may not have been noticed.

I think most of us noticed it when it came out a few weeks ago. Elon is late to the party

 

[HG Wells]

You have not heard the latest short logic.

Hitting 5K week is what will doom tesla. They think they can't sell 5000 a week.
As soon as tesla reaches 5000 a week the orders will dry up and tesla will declare BAKWUPCY !

How people can twist things soooo much, boggles the mind.

 

[HG Wells]

Short squeeze trigger.

The model Y can be produced on the same line as the model 3.

 

[Remus]

Actually, you're on to something, they'll probably be announced after the market closes on 7/3, so when the market opens in the US on 7/5, that will be the day of explosion.

Boom boom, out go the shorts!

This tweet sounds to me sounds like a call for the factory workers to rally and achieve the milestone.

 

[30seconds]

I don’t think announcements regarding future manufacturing plans for the Y, S or X will trigger anything given the company’s difficulty with the 3 ramp.

Same for FSD or Solar Roof.

But getting close to profitability in Q2, or having near term ramp to 6-8k / week or a outside party proving China GF financing may all be triggers

 

[Yonki]

I haven't seen anyone mention this yet, but the surest way to trigger a squeeze that I can imagine would be for someone to pull a few million shares out of the lending program.