Today was a surprise to me, given the strength TSLA showed yesterday in the down market. I suppose the CNBC 12 minute hit piece featuring Linette Lopez and two Jim Chanos cronies took a toll when combined with no news from Musk in Beijing and media stories that painted Tesla's hitting 200,000 vehicles deliveries in 3rd quarter as a negative (instead of the real positive that anyone watching carefully would conclude). Shorts were responsible for a bit over 58% of today's TSLA selling, which indicates that their efforts have already peaked (see chart below).
Short percentage of TSLA selling today was 58.20% I agree with Neroden that the number we get from FINRA and similar sources needs to be considered a relative number because of matters such as batching of transactions and normal market-maker/brokerage housekeeping. Nonetheless, I'll continue to refer to the number itself as any other approach becomes too clumsy.
Yesterday we learned that short interest was 36.1 million shares, an amazingly high number given that TSLA is so close to going profitable and staying profitable.
Looking at the technical chart, you can see that the blue 50 day moving average is coming very close to the red 200 day moving average and is setting up for a golden cross, which should attract technically-oriented traders. Meanwhile the climb that TSLA had been in has not deteriorated into the descent that shorts have been expending considerable energy upon, but rather we see a consolidation that will need to break up or down sometime soon.
The friend of shorts who claims to have some view of Tesla's production numbers is known as Skabooshka on twitter. His post for today is a Model 3 production rate of 700 M3s, which works out to be 4900/wk. I see no reason why a short would be exaggerating Model 3 production numbers, but any unconfirmed spy number needs to be taken with a grain of salt.
We're getting drone shots of red Model 3s (likely performance editions) sitting outside at the Fremont factory. The performance edition will be hugely important for Tesla because the mix of performance to overall production of M3 vs. MS or MX. The Model 3 is a smaller, lighter vehicle than the P100D and as such is more appropriate for attracting the attention of performance car fans. It will become the affordable Ferrari or Lamborghini for the masses. The considerably higher gross margins on this model of M3 will combine with the large numbers of the Performance M3 purchased to yeild a big assist to Tesla's ability to turn profits in Q3 and Q4.
So, If you're looking for upcoming catalysts, the list includes:
* Golden-cross
* Model 3 spy numbers suggest production up to sustainable 5K/wk production by tomorrow (plus cashflow + and GAAP profitable going forward)
* A possible giga-watt-hr. sized battery farm announced soon in California
* Model 3 performance vehicles available for test rides in week or two
* Model 3 performance vehicle reviews soon by automotive magazines
* Early August: 2Q ER with bad numbers but likely very positive guidance for Q3 and Q4 and confirmation that Tesla has already reached positive cash flow and GAAP profitable numbers in vehicle production
* More than 8,000 Modlel 3 Vins registered by Tesla in past couple of days, with a substantial number for dual-motor production
So, with lots of pressure from shorts, expect continued volatility but with all the good news coming out lately from the Model 3 production side of things I'm going to bet the current consolidation resolves into a rally at some point, rather than a drop (macros permitting).
Conditions:
* Dow up 244 (0.91%)
* NASDAQ up 107 (1.39%)
* TSLA 316.71, down 2.25 (0.71%)
* TSLA volume 5.7M shares
* Oil 70.35, up 0.02 (0.03%)
* Percent of selling by TSLA shorts: 58.22%
