Short-Term TSLA Price Movements - 2013

[Causalien]

I'm of the minority opinion that it will go down a lot more over the next weeks. A combination of effects; general market roll-over, short squeeze support is highly reduced if not absent, announcements are nearly over (back to reality time), next earnings will produce a Q over Q decline in EPS, fewer EV credits will make earnings comparisons a difficult explanation scenario to the knee jerk dumb money, the current valuation is 1/3 GM and prices in near perfect execution (sales and 25% margins), lack of news for a while to pump- we are in execution of price mode for a while. The 3 biggest bull counters I see are strong sales (likely stronger than projected), strong demand for new longs, and Elon/GS support at the $92 area. All together I think this produces some $80s opportunities and if any unexpected negative news occurs an even lower opportunity. My thoughts are to start average in proceedings in the low 90s

In one of Elon's interviews, he admitted that his past announcements are too optimistic and that he learned he need to tone it done and just be precise instead. Then he showed a sly facial expression which indicates that it actually suits his personality better. (Probably from reading feedbacks from you guys). Which is the major reason why I think all projections from now on are going to be conservative. Another thought just came to me after thinking of Tsla not as the next Ford, but the next XOM. TSLA stock is now a measure of ppl's desire to evolve past the current death grip of big oil and old cars.

 

[kenliles]

In one of Elon's interviews, he admitted that his past announcements are too optimistic and that he learned he need to tone it done and just be precise instead. Then he showed a sly facial expression which indicates that it actually suits his personality better. (Probably from reading feedbacks from you guys). Which is the major reason why I think all projections from now on are going to be conservative. Another thought just came to me after thinking of Tsla not as the next Ford, but the next XOM. TSLA stock is now a measure of ppl's desire to evolve past the current death grip of big oil and old cars.

yeah - saw that. And I'm glad frankly. Most people on this board and those who will be with them through thick and thin; on the yet long journey to come, are much more interested in real goals, real issues, real solutions, that yield real value- just like Elon's natural inclination.
I like your XOM typing vs Ford and agree; or at the very least some combination of the two. Roll SCTY into that complex and you've got what really may be the 'first trillion dollar company' (holding or otherwise)

 

[JRP3]

I agree with everyone :biggrin: I see good arguments for it going up, down, holding steady, pretty much anything can happen with this stock. I certainly never expected to be at these levels this quickly. I tend to lean towards kenliles viewpoint a little more, but that may be just because I'm hoping for some lower buying opportunities after foolishly selling some at $54. Not that I expect to get anything near that price point again.

 

[avatar]

I agree with everyone :biggrin: I see good arguments for it going up, down, holding steady, pretty much anything can happen with this stock. I certainly never expected to be at these levels this quickly. I tend to lean towards kenliles viewpoint a little more, but that may be just because I'm hoping for some lower buying opportunities after foolishly selling some at $54. Not that I expect to get anything near that price point again.

Agree. $80 - $130. That's the range I expect it to trade in. Both extremes would require some unexpected event.In reality I expect the stock to float around $90 - $95.

 

[ShortSlaver]

I can't believe it closed at 97. An I wrong to think this is a great time to buy?

Depends on your strategy. As said, if holding long term then sure. If looking to trade on trends you might want to see it get some support higher than this or at least at this price before jumping in. It's in a down trend but this can change in a second.

 

[bhuwan]

Depends on your strategy. As said, if holding long term then sure. If looking to trade on trends you might want to see it get some support higher than this or at least at this price before jumping in. It's in a down trend but this can change in a second.

Yeah. Thanks.

 

[blakegallagher]

I can't believe it closed at 97. An I wrong to think this is a great time to buy?

I believe it is a great time to buy ... wish I would have gotten some options at end of day but then again I may get to pick some up cheaper Monday we will see. I figure it will open up Monday. With Elon being more conservative now then he use to be it was great to hear him say one of the things that will assure the high resale value is that they will be supply constrained for years to come . When the average wait time starts climbing back up and approaches a one year wait I think the stock will hit new highs. With that being said Tsla's ups and downs constantly surprise me

 

[vgrinshpun]

I believe it is a great time to buy ... wish I would have gotten some options at end of day but then again I may get to pick some up cheaper Monday we will see. I figure it will open up Monday. With Elon being more conservative now then he use to be it was great to hear him say one of the things that will assure the high resale value is that they will be supply constrained for years to come . When the average wait time starts climbing back up and approaches a one year wait I think the stock will hit new highs. With that being said Tsla's ups and downs constantly surprise me

Don't forget that in the same interview Elon Musk also said that if current US order rate of 20K/year is extrapolated to worldwide orders, Tesla could see 50K orders on yearly basis, presumably in 2014. I actually think that world wide orders will increase to a levels higher than Elon's extrapolation suggests based on higher gasoline cost.

I do not believe that they will allow the wait time to climb, I have been thinking for a while (and posting on this Forum) that Tesla factory is going to scale up production pretty soon, definitely in Q4, may be sooner (as soon as they hit 25% margin).

I also bought some June 22 options in addition to the ones that I had already. My bet that the strong demand revelations (both during the SC call and CNBC interview) will not escape attention of investors and stock will go above $100 next week. (I might be seriously off with this assumption - there was a lot of ignorant questions during the CNBC interview)

 

[callmesam]

I'm of the minority opinion that it will go down a lot more over the next weeks. A combination of effects; general market roll-over, short squeeze support is highly reduced if not absent, announcements are nearly over (back to reality time), next earnings will produce a Q over Q decline in EPS, fewer EV credits will make earnings comparisons a difficult explanation scenario to the knee jerk dumb money, the current valuation is 1/3 GM and prices in near perfect execution (sales and 25% margins), lack of news for a while to pump- we are in execution of price mode for a while.
The 3 biggest bull counters I see are strong sales (likely stronger than projected), strong demand for new longs, and Elon/GS support at the $92 area. All together I think this produces some $80s opportunities and if any unexpected negative news occurs an even lower opportunity. My thoughts are to start average in proceedings in the low 90s

I think you are missing out on a few really big things the least of which is the annual shareholder's meeting and the June 20 announcement (battery swap, battery cartridge), Supercharger grand openings through end of June, Europe Supercharger and deliveries in July (Norway and Sweden probably to start) and then end of Summer Supercharger openings throughout the U.S. doubling to ~50 stations.

 

[rolosrevenge]

I don't know, in order to justify this stock price, TSLA needs to flawlessly execute everything for the next 3 years to get to gen 3. With Gen 3, S, X, and Roadster 2.0, they'll be making and selling enough cars to be valued more than what they are now. The stock is high on expectation of those results in a couple of years, but I doubt everything will go perfectly, and we'll expect to see the stock drop back into the the 80s at least. I mean, Tesla competes with BMW. BMW sells around 1 million cars per year, whereas Tesla will sell 21000 this year and maybe 35000 next year. That's between 1/50 and 1/28 of the output, but currently TSLA's market cap is only 1/10 of BMW. Even with higher margins and power train deals and credits and whatnot, TSLA seems over valued at current levels, so I'd expect that after a few months and 2nd quarter earnings report, a lot of people will get discouraged and the price will fall. Long term, I see anywhere between 250 and 500 for TSLA, but not for another 5 years or so.

 

[callmesam]

I don't know, in order to justify this stock price, TSLA needs to flawlessly execute everything for the next 3 years to get to gen 3. With Gen 3, S, X, and Roadster 2.0, they'll be making and selling enough cars to be valued more than what they are now. The stock is high on expectation of those results in a couple of years, but I doubt everything will go perfectly, and we'll expect to see the stock drop back into the the 80s at least. I mean, Tesla competes with BMW. BMW sells around 1 million cars per year, whereas Tesla will sell 21000 this year and maybe 35000 next year. That's between 1/50 and 1/28 of the output, but currently TSLA's market cap is only 1/10 of BMW. Even with higher margins and power train deals and credits and whatnot, TSLA seems over valued at current levels, so I'd expect that after a few months and 2nd quarter earnings report, a lot of people will get discouraged and the price will fall. Long term, I see anywhere between 250 and 500 for TSLA, but not for another 5 years or so.

I hate to throw math at you but Tesla is predicting 21,000 cars this year. What if they make 30,000 instead?

30,000 x $85,000 x .25 gross margins = $637,000,000
+
ZEV credits of $188,000,000
+
Carbon Credits of $70,000,000

(http://www.reuters.com/article/2013/05/14/autos-tesla-credits-idUSL2N0DV3HD20130514)

They look pretty fairly valued at $10B right now. With even modest growth, they could have much higher valuation.

 

[rolosrevenge]

But they can't have 30,000 at .25 gross margin because they didn't achieve that for first quarter. Plus ZEV credits will be gone by 4th quarter, especially if they make 30,000 cars.

 

[callmesam]

But they can't have 30,000 at .25 gross margin because they didn't achieve that for first quarter. Plus ZEV credits will be gone by 4th quarter, especially if they make 30,000 cars.

You are mixed up. Their efficiency has increased and costs have dropped, which lead their gross margins from -11% to + 5% Q4'12-Q1'13 (although when adding credits, this increased to 17%).

Elon Musk has stated unequivocally that they will likely achieve 25% during Q3, but will definitely have 25% or more by Q4. (Q2 delayed due to shipments to EU and then delay of payments).

Finally, read the link. The ZEV credits will slow throughout the year, but Q1'13 was $70M. Dropping from a rate of $280M a year to $188M a year is a decrease, but NOT an elimination.

AND each of the Major car companies will need to purchase additional credits in 2014, so the cycle will begin again next year.

 

[rolosrevenge]

I'm not mixed up. Your math says 30,000 at 25% gross margin, how about 4500 at 11% than another 6000 at 17% then 9500 at 23% (they achieve their 25% mid quarter) and then 10000 at 25%. That results in over $100 million less than your estimates. Plus this assumes that they can hit their efficiency targets while increasing production 50% higher than their current targets. Another way to look at it is to assume that BMW gets 8% gross margin, than Tesla's 21000 cars is equivalent to 63,000 BMWs or 1/15th the output. Still doesn't quite justify a 1/5th market cap.

 

[Nicu.Mihalache]

I'm not mixed up. Your math says 30,000 at 25% gross margin, how about 4500 at 11% than another 6000 at 17% then 9500 at 23% (they achieve their 25% mid quarter) and then 10000 at 25%. That results in over $100 million less than your estimates. Plus this assumes that they can hit their efficiency targets while increasing production 50% higher than their current targets. Another way to look at it is to assume that BMW gets 8% gross margin, than Tesla's 21000 cars is equivalent to 63,000 BMWs or 1/15th the output. Still doesn't quite justify a 1/5th market cap.

I very much agree with you! However, Tesla has an advantage over BMW, serious growth potential. So it depends tremendously if hope (you may even replace "o" with "y") will prevail against fear when the stock will hit a rough patch. If investors decide to value Tesla on EPS as a grown up company, we are in for a serious jump of the cliff (way below $50), as Q2 and Q3 will see negative EPS (with lots of "explanations" why this is not really it, à la Amazon - profits are evil etc.). If the present euphoria continues and the long term story prevails, analysts start talking about that mythical 500k / year with 25+% GM, then we could see $150 or $200 in a few months. My bets are on both sides, and I openly admit I have no clue which way it will go. But a trading range of $80 to $110 for more than 4 months seems very improbable to me.

 

[ShortSlaver]

I don't know, in order to justify this stock price, TSLA needs to flawlessly execute everything for the next 3 years to get to gen 3. With Gen 3, S, X, and Roadster 2.0, they'll be making and selling enough cars to be valued more than what they are now.

Tesla is a bit different from other auto manufacturers and their potential isn't just in how many cars they sell. As another thread here points out, the SC network could be the bigger play all things considered.

Things may "seem" overvalued when taken at face but they look to have far more potential than just selling cars. This story will begin to unfold and I expect price targets in the $140-$150 range.

 

[blakegallagher]

Tesla is a bit different from other auto manufacturers and their potential isn't just in how many cars they sell. As another thread here points out, the SC network could be the bigger play all things considered.

Things may "seem" overvalued when taken at face but they look to have far more potential than just selling cars. This story will begin to unfold and I expect price targets in the $140-$150 range.

I sure like to see price targets that high from you I will actually take some profits on the way up this time lol.

 

[DonPedro]

Announced by Elon:
- After June 20 they will "not have anything to day for a while"
- Q2 they will report a loss

I am convinced we will see a sideways/downward drift through to at least Sep/Oct.

 

[aznt1217]

Where did he say report a loss? I do believe it but I just didn't hear this. I would think a loss due to the continuous ramp up for the globe and increased logistics.

Announced by Elon:
- After June 20 they will "not have anything to day for a while"
- Q2 they will report a loss

I am convinced we will see a sideways/downward drift through to at least Sep/Oct.

 

[DonPedro]

Where did he say report a loss? I do believe it but I just didn't hear this. I would think a loss due to the continuous ramp up for the globe and increased logistics.

The Q1 shareholder letter. See section called "outlook". The droids you are looking for are found in this sentence:

However, the deferred revenue recognition required by GAAP for lease accounting will lead to a net loss on paper in Q2.