I haven't following the usual TSLA sources like the main investment thread, quarterly projections thread, twitter, reddit much these days.
From what you noticed, has the consensus been reasonably strong towards downward pressure on stock, both from P&D and Q1 earnings?
I am asking because, if the expectation is already low, should we consider it NOT a -ve surprise?
Do you foresee a stock bounce to 700-750 range sometime in the next weeks in anticipation and then going down?
The first and most important thing to realize is that my read on short term movements is probably a better contrarian indicator. Except when I decide that my opinion IS a contrarian indicator, so I do the opposite. In that case I had it right
. Its sort of the same thing as me and plugging in a USB cable - I always get it backwards on my first attempt - even when I remember I get it backwards and reverse it before I try the first time. *sigh*
And my 'coverage' of the company is adequate for me from a long term buy and hold perspective. Namely - is the strategy and execution still working or not. The monthly or quarterly movements are irrelevant to that long term perspective.
HOWEVER as somebody that is also selling short term options now, I am also interested in the shorter term movements now.
As a direct response - yes when expectations are really low that is a good time for a surprise to the upside. The market is a forward looking and pricing entity. From what I see on this board though, there is too much exuberance to think that expectations are low enough to produce a significant and sustained upside surprise.
I DO see bounces that don't last that long into the 700s as on the table. Its the nature of share price movement. What I've also seen in the recent share price chart is a series of lower highs and lower lows I see this pattern as more likely to continue for awhile than it is to reverse soon.
What I see in the market is formed by some of the recent press about the broader tech and high growth markets - these companies have been getting whacked by the 10 year treasury yields going up. I do understand why that is - it just doesn't matter to me for long term buy and hold. But its affecting me in the short term. I can't convert that into a specific change in the share price, but I do think the 10 year treasures are increasing in yield to something more typical. Picking a random year (2010) from:
NOTICE: See Developer Notice on February 2022 changes to XML data feeds. Daily Treasury PAR Yield Curve Rates This par yield curve, which relates the par yield on a security to its time to maturity, is based on the closing market bid prices on the most recently auctioned Treasury securities...
www.treasury.gov
The typical yield was in the mid 3% range at start of 2010, and got into the low 2's during the year. Pretty sure THAT was considered low, and we're 1.6% recently up from 1.3%, which at least some are using to explain the 850 > 650 move we've seen recently.
I don't see that this as a complete explanation, but if a 30 basis point move is associated with the recent share price move then we can guess at what a 150 basis point move will look like. And related - this is still in a historically easy money context - the Fed has continued indicating that we've got aways to go before they start raising their target interest rate - we're still WELL below how they measure inflation and their 2% inflation target (which I also consider to be a reasonable / good target - a bit of inflation is healthy, if for no other reason that means there is a cushion between that point in time and deflation).
I see my flat to down bias as a combination of the normalization of inflation / short term / longer term interest rates (along with a return to more typical economic activity); (2) a significant regression of the amazing run Tesla has been on recently, AND (3) a modestly "bad" P/D report (S/X lines down for part of the quarter) and a "bad" follow up earnings report.
Taking the other 2 points:
regression. Using only post-split numbers, Tesla was ~$80 in late 2019. That was the upper end of a long trading range in the $60-$80 trading range, which was itself a recovery from that amazing drop in mid-2019 to $37.
Late 2019 and early 2020 the shares started moving up crossing $100 in Jan 2020. There was a brief return to $85 (still above the old trading range) in March 2020 and the share price has been nearly vertical since then, reaching $880 in Jan '21 (you know - 2 months ago).
I think more relevant though is the shares were around $400 in Nov '20 when the S&P inclusion was announced. I can easily argue why the S&P inclusion would stand in the way of the shares returning to $400 each, but I can also argue why they can return to $400. At the very least, a consequence of this very high share price is that we need a significant source of new buyers / buying for the shares to return to $800 and go beyond that. Where will these buyers come from? (I'll come back to this).
All those numbers will come from any longer term chart of TSLA share price. I got it from:
Third - while I expect that -I- will be very happy with the Q1 results (and other long term investors), I don't expect the wider investment community or the financial media to be all that enthused. Simplistically - I don't see anything coming in this Q1 report that will draw in a big pile of new investors that will drive the share price higher in a big way.
I also see that ARK share price projection (whether it happens next year, 2025 or 2028) to be inevitable, so a move down to $400 in the short term doesn't bother me - that is still 5x the level in 2019.
As for what I'll be doing about it - I see good reasons to be out for P/D and earnings each quarter. I don't see this quarterly results as being exceptionally important from any other quarterly results, and if anything less important than usual.
BUT we know there is good stuff happening and good news coming sooner or later. What do I think can/will move the needle in terms of pulling a significant volume of new buyers? No particular order and all MHO:
- earnings are so good, including EPS so high, with evidence it'll be ongoing that investors see a chance to own the next Apple with Apple's cash generating ability. This won't happen with Q1 results and we'll probably only see hints in 2021.
- FSD is made available to the whole fleet of capable vehicles and its so good that the world has a mental model of what an autonomous vehicle might look like. Or at least a vehicle that can take a person from A to B on reasonably arbitrary roads.
- China GF gets its next phase of construction complete and online. China P/D doubles and there is evidence of continued fast growth there.
- Berlin GF starts producing and delivering to European market. Construction on next phases is going so fast that there is evidence of rapidly expanding growth in Europe.
- Ditto GF Texas.
- And all of those GF outputs combine to show financial analysts a path to a sustained 50% units growth rate, even if those units don't translate to a 50% revenue growth rate.
And in that list, the only 'soon' and likely big positive catalyst I see is FSD. The rest of this is another year of steady and exciting progress from my point of view, and I believe what the financial community will view as a yawner.