Papafox's Daily TSLA Trading Charts

[Papafox]

Trying to make some sense out of the various estimates of Model 3 production.

* In theory, skabooshka is getting his numbers from a Tesla employee, which implies extreme accuracy, but skabooshka is someone that we really can't trust (yesterday he suggested that the low numbers might be caused by a paint-shop fire), so be careful drawing conclusions with his numbers in the week leading up to the ER.
* Troy has been doing estimates of production of Tesla and in the past his estimates have been very accurate, sometimes with only a 4% error. On the other hand, Tesla has changed the lead time in assigning VIN numbers now, and this change might throw Troy off. His numbers for Q3 so far are running noticeably above skabooshka's.
* Bloomberg's estimate is also well above skabooshka's
* One possibility is that Tesla may give a push for a new record during the week leading up to the ER, in order to give Elon good news to include in the conference call. It'll be interesting to see if skabooshka's numbers reflect an upward jump in M3 production numbers in the next day or two. A little more than a week ago we saw 4 days in a row of 700 and higher M3 production (800 was best), and so we know that the factory is capable of producing at this level.

 

[Papafox]

Shorts did 60.86% of TSLA's selling today, down from yesterday but still very high

 

[Papafox]

And in the battle of the media and short-seller circus vs. the longs, the longs took the gold cup today as the buying pressure below 300 led into a splendid rally. A neutral note from Adam Jonas discounted many of the current bear arguments, and Normura Instinet said today that TSLA should rise as production in the September quarter leads to more deliveries than expected. One analyst today said that orders with suppliers of Tesla Model 3 are for more than 6,000 units per day and for this reason we have reason to believe that production numbers will be rising noticeably, giving TSLA upward price pressure. With any luck, today may define the low point of this pre-Q2 ER dip.

The one big headwind for TSLA tomorrow will be a likely negative macro environment with Facebook losing about 20% after hours due to lower growth expectations. You can see the effect of the Facebook announcement in TSLA after-hours trading, bottoming out about 6pm.

So, momentum has turned positive for TSLA but tomorrow's opening might be a bit bumpy. What to expect? Shorts will likely try to exaggerate any macro pressure in the morning in order to describe today's trading as a fluke, but with only 5 trading days left before the Q2 ER, investors are now starting to position themselves for the ER, and so manipulating TSLA will be more difficult than last week. Don't be surprised to see a noticeable mandatory morning dip tomorrow as short build upon macro weakness, but I wouldn't be surprised to see the dip unwound by afternoon or perhaps sooner.

Looking at the tech chart, you can see TSLA bouncing back from the lower bb trading the past couple of days. I suggest that the market has had time to ponder the WSJ note to suppliers, has determined that liquidity concerns were ill placed, and the market is hiking TSLA back to a more reasonable price.

You can see quite a bit of the trading in the past three weeks has been between the blue 50 day moving average and the red 200 day moving average. I wouldn't be surprised to see the SP settle back into this area between 315 and 320 to wait out the approach of the 2Q ER because it appears to be a comfort zone for the stock at present.

skabooshka's numbers for Tuesday return Tesla's production to more normal levels with 930 vehicles produced.

Conditions:
* Dow up 172 (0.68%)
* NASDAQ up 91 (1.17%)
* TSLA 308.74, up 11.31 (3.80%)
* TSLA volume 6.9M shares
* Oil 69.44, up 0.14 (0.20%)

 

[Papafox]

Regarding Wednesday's trading...
* Here's a link to a story about Romit Shah of Normura expecting a surge in production in Q3 and reiterating his $450 price target for TSLA.
* Curt Renz had an interesting post in the market action forum about the other US car manufacturer stocks tanking this morning while TSLA was up.:
"Currently:
-15.0% FCAU
-07.4% GM
-03.8% F
+01.4% TSLA"
TSLA Market Action: 2018 Investor Roundtable
and
TSLA Market Action: 2018 Investor Roundtable
* The macros lept up in the final half hour of trading today on word that the EU has given concessions to the US which will preclude a trade war. Part of the significance of this victory for Trump is that it gives him more credibility in his dealings with China in that trade war. I continue to believe that a decent agreement will be made with China in the foreseeable future (before November elections) that will be benefitial to Tesla in shipping Model S and X to China at a lower tariff. Stay tuned.
* Finally, something I look for in a reversal from dip to climb for TSLA is a day when the strategies of the shorts are defeated by market pressure to buy TSLA. With over 60% of the selling done by shorts, and with TSLA still up 3.8% for the day, I'd say we have one more indication that TSLA has bottomed out.

My feeling is that Facebook having a growth issue is not a huge deal compared to the other news today and TSLA should show some strength leading into the Q2 ER.

 

[JeffreyY]

Papa what's your take on this thread?

ben k on Twitter

 

[Papafox]

Papa what's your take on this thread?

ben k on Twitter

Cars sitting in storage- Are those cars sitting in storage or are they in transit lots at places such as Lanthrop? Were the pictures taken at the end of Q2 when Tesla was deliberately slowing down the delivery pace in order to avoid reaching 200,000th US car that quarter? Did you know that 40% of Model 3s manufactured in Q2 were not delivered until July? Yep, that can be lots of vehicles, but lack of demand is not likely the reason, especially for Model 3

Cars at stores that have been there for weeks/ months- Pretty much the way Tesla has been doing business at stores for years, isn't it?

Stores filled up with cars to brink of capacity- I suggest visiting your local store and checking this out yourself. Ask the Tesla employee how sales are going.

Tesla is now advertising- I just Googled "Tesla advertising" but couldn't find anything that resembled advertising. Highly targeted internet ads might make sense for S and X. I just went to Tesla's page to build a Model X and received a two month timetable for delivery. If all orders had already been built, I suspect the delivery time would be less.

The short thesis used to be that
* Tesla can not produce Model 3 in great quantity
then it became
* Tesla cannot make Model 3 at a price that can turn the company profitable
both of these bear thesis have been destroyed, so the new push is:
* Demand is about to become a problem-just look at that lot!
* Elon Musk is either P.T. Barnum or about to be carried away in a straightjacket
* Tesla doesn't have enough cash to last until it turns cash-flow positive

So, there is no demand issue for Model 3. Demand for S & X has been about 100,000/yr but has been growing. Perhaps Tesla has finally been able to build S and X fast enough to to exceed demand, particularly with China tariff issues (but Tesla sold 4K Tesla S and Xs in China in June), so maybe not. One explanation if there ever were excess S and X is that Tesla knows they can sell them near year end as the 7.5K tax credit is about to be cut in half. Another might be that S and X might be heading toward sharing a common assembly line (originally envisioned on the current X line, and the old S line would be rebuilt to accommodate Model 3. The change in production would create a need for sufficient inventory S and Xs to satisfy demand during the transition. Lots of possibilities, but Tesla having too many cars and not knowing what to do with them is not a reasonable explanation.

 

[Nakata]

The demand issue is BS.
So Tesla decides to stockpile M3's because they can not sell them in North-America.

If this would be the case i would think they ship them to the rest of the world.
I guess they ran out of demand from europe and china without selling a single car.

I see he uncovered an even bigger problem
ben k on Twitter

Somebody is running out of straws!

 

[SwTslaGrl]

For production and deliveries I look at the actual numbers, see Tesla Q2 2018 Vehicle Production and Deliveries | Tesla, Inc.

I don't know what "ben k on Twitter" is talking about

 

[JeffreyY]

View attachment 320392
Cars sitting in storage- Are those cars sitting in storage or are they in transit lots at places such as Lanthrop? Were the pictures taken at the end of Q2 when Tesla was deliberately slowing down the delivery pace in order to avoid reaching 200,000th US car that quarter? Did you know that 40% of Model 3s manufactured in Q2 were not delivered until July? Yep, that can be lots of vehicles, but lack of demand is not likely the reason, especially for Model 3

Cars at stores that have been there for weeks/ months- Pretty much the way Tesla has been doing business at stores for years, isn't it?

Stores filled up with cars to brink of capacity- I suggest visiting your local store and checking this out yourself. Ask the Tesla employee how sales are going.

Tesla is now advertising- I just Googled "Tesla advertising" but couldn't find anything that resembled advertising. Highly targeted internet ads might make sense for S and X. I just went to Tesla's page to build a Model X and received a two month timetable for delivery. If all orders had already been built, I suspect the delivery time would be less.

The short thesis used to be that
* Tesla can not produce Model 3 in great quantity
then it became
* Tesla cannot make Model 3 at a price that can turn the company profitable
both of these bear thesis have been destroyed, so the new push is:
* Demand is about to become a problem-just look at that lot!
* Elon Musk is either P.T. Barnum or about to be carried away in a straightjacket
* Tesla doesn't have enough cash to last until it turns cash-flow positive

So, there is no demand issue for Model 3. Demand for S & X has been about 100,000/yr but has been growing. Perhaps Tesla has finally been able to build S and X fast enough to to exceed demand, particularly with China tariff issues (but Tesla sold 4K Tesla S and Xs in China in June), so maybe not. One explanation if there ever were excess S and X is that Tesla knows they can sell them near year end as the 7.5K tax credit is about to be cut in half. Another might be that S and X might be heading toward sharing a common assembly line (originally envisioned on the current X line, and the old S line would be rebuilt to accommodate Model 3. The change in production would create a need for sufficient inventory S and Xs to satisfy demand during the transition. Lots of possibilities, but Tesla having too many cars and not knowing what to do with them is not a reasonable explanation.

Thanks! I saw a good article on Seeking Alpha (believe it or not) also on this topic.

 

[neroden]

Trying to make some sense out of the various estimates of Model 3 production.

* In theory, skabooshka is getting his numbers from a Tesla employee, which implies extreme accuracy, but skabooshka is someone that we really can't trust (yesterday he suggested that the low numbers might be caused by a paint-shop fire), so be careful drawing conclusions with his numbers in the week leading up to the ER.
* Troy has been doing estimates of production of Tesla and in the past his estimates have been very accurate, sometimes with only a 4% error. On the other hand, Tesla has changed the lead time in assigning VIN numbers now, and this change might throw Troy off. His numbers for Q3 so far are running noticeably above skabooshka's.
* Bloomberg's estimate is also well above skabooshka's
* One possibility is that Tesla may give a push for a new record during the week leading up to the ER, in order to give Elon good news to include in the conference call. It'll be interesting to see if skabooshka's numbers reflect an upward jump in M3 production numbers in the next day or two. A little more than a week ago we saw 4 days in a row of 700 and higher M3 production (800 was best), and so we know that the factory is capable of producing at this level.

We know the factory is bursty. I would strongly expect that what happened is that they figured out a list of changes to solve more bottlenecks, and decided to slow down for a couple of days to do the retooling to solve those bottlenecks. (Remember, AWD and white interiors are going into mass production now -- there may be tweaking associated with both.) We should now expect a quick push back up to new daily highs before the next round of bottleneck removal.

 

[neroden]

One explanation if there ever were excess S and X

People here documented S production in excess of order demand (significant inventory builds) twice, for short periods back in 2013 and 2014, using VIN tracking. I don't think it's been seen since the X started prodution (Tesla can change the mix of S&X, and we've never seen a long run of inventory builds for X).

is that Tesla knows they can sell them near year end as the 7.5K tax credit is about to be cut in half.

I would expect a burst in demand for S&X before the tax credit is cut in half, yes.

Another might be that S and X might be heading toward sharing a common assembly line (originally envisioned on the current X line, and the old S line would be rebuilt to accommodate Model 3. The change in production would create a need for sufficient inventory S and Xs to satisfy demand during the transition. Lots of possibilities, but Tesla having too many cars and not knowing what to do with them is not a reasonable explanation.

 

[Boomer19]

going from 2000 to 6000 deliveries per week...

people (bears/bulls) are grossly underestimating the logistical demands this imposes, and coming up with demand fears/theories.
it’s a problem that must be worked through in a live environment, where growing pains are truly solved. you can’t do this in a vaccuum...software upgrades, throwing bodies at it, and facilities.
as far as software issues, you try to automate as much as possible. you anticipate the obvious issues, but can never anticipate all problem use cases.
if you can capture 80% of the software related issues with software improvements, then you’ve struck gold. you go live, get the required feedback, and keep improving. you can then handle another 10% of the problems, and the remaining 5-10% of problem use cases is the hardest to capture. these you’re normally at mercy of outside forces, regulations, restrictions, etc.
and i won’t even touch on the facilities and human aspect of of it...even harder.

take a look at the model 3 threads related to ordering, deliveries, the meaning of website states (my edit buttons locked, but i didn’t receive a call, no email, will it be 48 hours, etc etc. there’s like a thousand of them, it’s impossible to follow.

once they get through this trough and get the software dev teams aligned with what outstanding priorities are left to tackle with regards to logistics and communication (@neroden continuously stressing this) to customers, these fears will subside and we’ll be onto the next set of issues.

 

[ggr]

Mod: On behalf of @Papafox, this thread serves a useful purpose, and discussions like this should happen in a different thread. --ggr.

 

[Papafox]

To nobody's surprise, the NASDAQ had a bad day, down 1%, mostly due to the Facebook 20% drop at earnings report. In contrast, the Dow was up 0.44%. I'm going to say that today was a small victory for TSLA longs and here's why. TSLA closed down 0.68%, which is quite a bit better than the NASDAQ and many other tech stocks. It did much better yesterday than U.S. auto stocks. So, whether you believe TSLA is an auto stock or a tech stock, it has been outperforming its sector in the past two days. Very low volume suggests that TSLA longs weren't selling for the most part, they just hunkered down while waiting for next week's ER.

Looking at the daily gyrations you can see TSLA pulling away from the negativity of the premarket to actually break 310 for a short period, but the shorts were not going to let TSLA get away with such a transgression into the green zone on a down NASDAQ day and proptly bopped it back down. After a couple morning dips with quick near recoveries (a sign of short-sell manipulations), a game of whack-the-mole ensued around noon time, followed by another push downward, and a recovery for the remainder of the day.

Hmm, some interesting developments in after-market trading

With some ambiguity about who won the SP battle today, expect the shorts to try pushing again tomorrow. I suspect good NASDAQ performance will lead to a good TSLA performance. It was the missing link today.

I continue to believe there's pressure for TSLA to drift a bit higher prior to the Q2 ER. In the coming week the SP will be influenced by perceptions of M3 production. The contents of that ER will determine where we go from there.

Speaking of M3 production perceptions, on Wednesday, TSLA increased M3 production to nearly the 700 level and total S+X+3= 1000, according to the somewhat questionable skabooshka numbers, which should make Tesla a cash-flow-positive company as long as this level at least holds (it will undoubtedly go higher).

Shorts sold 55.88% of TSLA on Thursday, which continues a downtrend for the second day and suggests shorts are no longer getting the desired results from manipulations.

Conditions:
* Dow up 113 (0.44%)
* NASDAQ down 80 (1.01%)
* TSLA 306.65, down 2.09 (0.68%)
* TSLA volume 4.4M shares
* Oil 69.62, up 0.32 (0.46%)
* Percent of TSLA selling by shorts: 55.88% accord to volumebot.com

 

[Papafox]

For the second day in a row, TSLA ran into macro headwinds. With the NASDAQ down nearly 1 1/2 percent today, it was a tough environment. Add in shorts doing nearly 58% of the TSLA selling today and news that famed short-seller Steve Eisman has a short position in TSLA and you have a really tough trading environment.

Looking at today's NASDAQ chart, you can see that TSLA followed the NASDAQ closely, but at exaggerated percentages.

Shorts sold 57.72% of TSLA today, up slightly from yesterday.
Why do we see short-selling increase on down macro days? It's really a matter of the environment for shorts to make a profit with their day-trading tactics. A descending NASDAQ day typically gives shorts who enter a TSLA position early attractive options to exit those positions later in the day at a profit. The same cannot be said of days when TSLA is climbing in the afternoon.

Here's the tech chart for today, which reveals that the lower bollinger band is still pairing up nicely with the propensity for buyers to materialize any time TSLA is trading below 300, and you have a reason for today's bottom. Taking a look at the past three weeks of trading, after the big dips on July 2 and July 3, TSLA has been trading horizontally for the most part, but in the past week negative macros have allowed TSLA to hang just above the lower bb. I had been expecting TSLA to return to a more comfortable point in the long/short tug-of-war, some place closer to the 50dma and 200dma vicinity, but continued short pressure and bad macros have prevented that return, so far.

And now for the good part I've been speculating that Tesla may be ready to string days of growing M3 production together in the week prior to the ER, and so far it is doing so. Today's numbers from short-sympathizer skabooshka shows M3 production at 780 yesterday (715 needed for 5K/wk pace), which is a full 65 Model 3s above what is needed for 5K/wk. Let's watch this number over the weekend to see if it keeps growing as the (undoubted) tweaks to the production lines on Sunday and Monday allows Tesla to hit record daily outputs. We've already seen 800 in a day. Let's see if Tesla can do 857/day, which is the rate needed for 6K/wk.

Amid all this noise from the shorts, keep in mind that with Tesla building and selling over 1000 S+X+3s a day (Tesla was at 1100 today), Tesla should be profitable and cashflow positive. In other words, in the battle for survival, if these current numbers are real and sustainable, then Tesla has already won the war. Recovery of the SP is a foregone conclusion.

This is why we need to get through the Q2 ER. Q2 should be the last "stinker" of an ER that investors have to endure for quite some time. Shorts can only successfully work their manipulations if there is an element of dread in the minds of the longs and right now fear of the Q2 ER is the source of that dread. If the Model 3 numbers can average above 5K for the week prior to the ER, we have another data point. If 6K/wk production rate can be hit on a single day, we have another data point. At some point, these data points will add up to make the convincing argument that Tesla has indeed turned the corner and is generating cash instead of "burning" it. At that point, and with the Q2 ER out of the way, TSLA will be cleared to recover lost territory.

For the week, TSLA closed at 297.18, down 16.40 from last Friday's 313.58. I'll be posting production numbers daily throughout the next few days. Enjoy your weekend. Better days lay ahead.

Conditions:
* Dow down 76 (0.30%)
* NASDAQ down 115 (1.46%)
* TSLA 297.18, down 9.47 (3.09%)
* TSLA volume 5.5M shares
* Oil 68.69, down 0.92 (1.32%)

 

[Papafox]

A bit lower on M3 for Friday but 3+S+X= 990, which is only 1% away from the target of 1000/day total production, and if Skabooshka is rounding down, which is likely, we may have been over.

As Neroden mentioned elsewhere,. as Tesla works to achieve the 6K/wk output, it will identify bottlenecks, work on the bottlenecks (which likely results in a bit of a production hit) and then moves forward again. There's a natural back and forth movement for this reason.

 

[Papafox]

If you believe these numbers are real, then today's numbers indicate Tesla is still in the up down cadence as it works out bottlenecks. If a record run was planned, it would likely be started by now.

 

[Papafox]

Today was a big down day for the broader markets, and particularly for the tech sector, and TSLA followed the sector down. Other than some low weekend numbers from a short-seller's twitter account, there was no news of substance. Here are some numbers:
NASDAQ: down 1.39%
NVDA: down 3.13%
BABA: down 2.43%
AMZN: down 2.09%
The bad news with this dip to 290 is that some TSLA bulls received margin calls today. The good news with this dip is that more-conservative longs are buying today. Expect a fairly large number of longs to wait until after the Q2 ER to pick up additional shares as well. Relatively low volume today was also a sign that this dip is macro-related rather than something that was caused by significant news.

Skabooshka's M3 production numbers aren't out yet. Again, I suggest caution with these numbers because Skabooshka recently suggested that a fire in the paint shop was the reason for low numbers one day (it likely wasn't) and at the end of Q2 he suggested that M3 reached 5K/week only because S and X lines were lacking employees, who were helping out on the M3 line. In actuality, S and X delivered their quotas that week.

Conditions:
* Dow down 144 (0.57%)
* NASDAQ down 107 (1.39%)
* TSLA 290.17, down 7.01 (2.36%)
* TSLA volume 6.6M shares
* Oil 70.10, down 0.03 (0.04%)
* Percent of TSLA selling by shorts: 77.92 (volbot.com)

 

[neroden]

77.92%?!? (...and... any margin-called longs who sell mean fewer shares to lend to short-sellers interest free). I'm wondering if I'm going to get an upgrade to my Fully Paid Lending rates soon...

 

[Papafox]

Looking at the tech chart, you can see that TSLA closed slightly below the lower bollinger band today. Typically we don't see TSLA outside the BBs for more than 2 days in a row, with exceptions such as the very rapid climb in June.

Still no posting of M3 numbers from skabooshka. If the numbers are good, refusing to show the numbers going into the ER would be consistent with this person's slippery negativity towards Tesla. Since he discontinued reporting numbers before the end of Q2, and he clearly lied about S and X production being stopped in the final week of Q2 in order to pump up the M3 numbers, we should consider the numbers as highly suspect.