Would all of you please do me a quick favor? Raise your hand if you have had a chance this quarter to review the FactSet list of analysts forecasts for TSLA's Q4 production and delivery numbers. Yeah, I thought so. Tesla put forward some seriously good numbers today and the mainstream media was set to pounce on them with these FactSet numbers while shorts went to work selling like crazy to convince gullible investors that Tesla just had a bad quarter. Sigh. I've heard (but not confirmed) that BofA's analyst set a 71K number for Q4 M3 production (but not a price target compatible with that projection). Likewise I have heard that Goldman was showing something like 63K or 64K production of M3. No wonder Tesla underperformed the FactSet numbers. If you haven't yet seen
@Fact Checking 's post on the subject, I suggest doing so. At least I had no short-term bets active, which is a lesson to all of us.The manipulations are numerous in this crooked casino overseen (in principle) by the SEC. Nonetheless, TSLA bounces off its near-ATH a few times every year, so with some patience this madness will become just a bad memory growing smaller in the rearview mirror. This dip was necessary to:
* give the short-seller friends of the media a convenient exit point before the crush of Q4 ER numbers and
* give the big dog long players a nice buy-in price to take advantage of the coming Q4 ER
Compounding the "disappointing" Q4 production and delivery report was word from Tesla that it is lowering the price on U.S. medium and long-range Model 3s as well as Models S and X by $2000 in order to take away some of the sting of a tax credit reduction. Although if demand was unlimited such a reduction in price would not be necessary, the reduction does not mean a lack of demand either, though. Fully three quarters of Q4's M3 orders were new (not from the reservation list), which suggests strong ongoing demand for these cars. Additionally, a $2000 cut in price suggests improvements in efficiency of manufacturing that makes possible such cuts and still allows a decent margin.
Relax, though, because we're going to see some decent profit and cash-flow numbers in the 4th quarter's Earnings Report. Here's
the full production and delivery report from Tesla, that shows in Q4:
* Model 3: 61,394 produced, 63,150 delivered
* Models S&X: 25,161 produced, 13,500 Model S and 14,050 Model X delivered
* Total deliveries were 90,700
Further, InsideEV
says in this article that Tesla delivered 25,250 Model 3s in December, breaking all records for maximum number of EVs delivered in any quarter. Further, InsideEV estimates that Tesla accounted for about two-thirds or all EV revenue in 2018. That's what I call a commanding marketplace position.
I'm pleased that my friends did an excellent job of guessing greater than 60K M3 production and deliveries and we were able to see that Troy's and Bloomberg's methodologies just weren't working this quarter. Fact Checking's estimates were nearly right on using his rather simple method. We've done a really good job at TMC in Q3 and Q4 anticipating what will happen with the numbers, but it's nearly impossible to keep from being blindsided by the short/media connection from time to time. As always, keep your options expiring well in the distance to avoid these surprises. There will be more, we can count on it.
The NASDAQ began the day in the cellar but climbed into the green by closing and closed up nearly 0.5%
The day began with TSLA and the broader markets down, but when the media started calling Q4 a miss for Tesla and shorts began to sell, it triggered the algos and a massive selling spree began. TSLA was nearly down to its daily low by the time the market opened. A total of 265K shares traded hands in the first minute, giving shorts a chance to close positions with no significant effect upon the stock price. At 9:40am, just 10 minutes into market trading, TSLA triggered
the Short Sale Circuit Breaker, also known as the alternate uptick rule, which prevents short-sellers from putting in a short sale bid that is below the trading price. We've seen how this rule does a good job of stopping the downward icicles that indicate short-seller manipulations to Teslaholics such as myself, but this rule is not so efficient in keeping the shorts from reducing the stock's climb. With 64% of the selling attributed to shorts, however, you better believe they were working to minimize TSLA's recovery that would normally happen as the NASDAQ rose.
TSLA shorts worked hard today to keep TSLA from running higher with the NASDAQ's recovery with 64% of TSLA selling attributed to them
Looking at the technical chart, you can see that the lower bollinger band worked as support today during the max craziness.
The alternate uptick rule will be in force tomorrow too, so TSLA should see some relief from the otherwise brutal short-seller efforts to suggest that this Q4 production and delivery report was a stinker. Working against the NASDAQ tomorrow will be a hangover from today's AAPL report that iphone sales are lagging. You could see the dip in TSLA and other tech stocks prior to 5pm in after-hours trading when the AAPL report came out.
Let's hope that Tesla's 4Q ER beats the 3Q ER in terms of profits and cash flow. This dip is a nonsense dip, for the most part, and recovery could be fairly quick if analysts start figuring out 4Q profit and cash flow numbers and then upgrading price targets.
Conditions:
* Dow up 19 (0.008%)
* NASDAQ up 31 (0.46%)
* TSLA 310.12, down 22.68 (6.81%)
* TSLA volume 11.7M shares
* Oil 45.83, down 0.71 (1.53%)
* Percent of TSLA selling tagged to shorts: 64%