Short-Term TSLA Price Movements - 2013

[DonPedro]

Reading DaveT's post made me think about my sell orders... let me ask if this is a good strategy.

I have ten TSLA lots and I have "stop loss" orders on all of them... currently set to between $84 and $93. Most of these lots were purchased at prices well below this. So unless there is a massive drop in the stock outside normal hours, I have a pseudo guarantee of a certain (large) level of profits.

I modify these ten sell orders from time to time... mostly when the stock rises to all-time highs. It's my intention to keep the top sell order limit to 85% of the all-time high. This way I am allowing for 15% volatility. If the stock falls a bit, I leave them as they are; so far none of them have triggered because the stock price recovers. However, if after several down days the stock falls to (say) 20% below its all-time high, then one or two of my sell orders will trigger, taking some profits off the table but not abandoning the stock altogether (since maybe it is just one more large swing downwards before another miraculous recovery).

So given the $120 currently I would modify my ten lots to sell at $93 thru $102. (which I am about to do)

If the stock rises on Monday to (say) $122 - even intraday - I could modify them to sell at $95 thru $104.

Any time the stock falls, I hold my orders as they are - but if the stock rises, I adjust them upwards.

Does this sound conservative enough and yet still focused on effectively taking reasonable profit?

(BTW I understand our nightmare scenario: if, heaven forbid, a catastrophic event occurs for TSLA outside trading hours, and the stock opens much much lower, below all of my stop loss orders, all of my lots will trade more or less immediately at the new low price - and not even at my stop limits)

A stop loss order does not guarantee that you will get your limit amount in a catastrophic scenario. If NUMMI burns down and it turns out Tesla had made an error insuring it, nobody will pay $100 for your shares. The stock price will fall through your limits, and then you will be selling your shares at whatever fire-sale price someone is willing to pay that day. Whether the disaster happens within trading hours or outside doesn't matter much.

Your approach may work in terms of you feeling protected. Several people on this forum have seen their positions being taken out by downward spikes followed by very rapid rebounds. The paradox of your approach is that you are saying that you are not willing to sell your shares at $120, but if the price fell to $95-104 you would be willing to sell.

A better way to securing your gains could be to take profit on some of your "lots" at the current high prices, and then rather ride out dips with the remaining shares (or even get back in for a second ride with the original money).

 

[Norse]

TSLA up almost 4% in Frankfurt today.

 

[maekuz]

This piece from Bank of America spoiled the party today (so far): BAML: Tesla Is Hugely Overrated - Business Insider

 

[deonb]

This piece from Bank of America spoiled the party today (so far): BAML: Tesla Is Hugely Overrated - Business Insider

Just imagine the authors kids in 2020.

Dad? Did you write this?
I did, son.

How could you have been so wrong? You said Tesla would never sell more than 300K vehicles per year?
They only had the Model S selling back then. Tesla "cheated" a bit by bringing out a new cheaper model. Nobody in the world could have seen that coming.

But didn't Tesla pre-announce everything years ahead of time back then like they do now? (Can't wait for my new Tesla hovercraft btw.)
They actually did. But working at Bank Of America... we weren't allowed to look at the google. We could only judge them based on what they did right there and then.

But how can you create a forward looking statement by not looking to the future?
You're right. Actually, we didn't really have any idea what was going on. We just thought that Tesla would go under and we would all look like geniuses to everybody.

That kind'a backfired, didn't it?
I guess. But don't worry - we're going to make lots of money now by shorting this Hyperloop stock!

 

[Rifleman]

This piece from Bank of America spoiled the party today (so far): BAML: Tesla Is Hugely Overrated - Business Insider

I fail to see what is unreasonable about 300k annual sales in 2020?

2030 sales could break down like this :

40k Model S
50k Model X (I think at this point in the game, the Model X will actually be more popular than the S)
100k Gen 3 Sedan
100k Gen 3 CUV
10k Gen 3 Roadster.

 

[ggies07]

Just imagine the authors kids in 2020.

Dad? Did you write this?
I did, son.

How could you have been so wrong? You said Tesla would never sell more than 300K vehicles per year?
They only had the Model S selling back then. Tesla "cheated" a bit by bringing out a new cheaper model. Nobody in the world could have seen that coming.

But didn't Tesla pre-announce everything years ahead of time back then like they do now? (Can't wait for my new Tesla hovercraft btw.)
They actually did. But working at Bank Of America... we weren't allowed to look at the google. We could only judge them based on what they did right there and then.

But how can you create a forward looking statement by not looking to the future?
You're right. Actually, we didn't really have any idea what was going on. We just thought that Tesla would go under and we would all look like geniuses to everybody.

That kind'a backfired, didn't it?
I guess. But don't worry - we're going to make lots of money now by shorting this Hyperloop stock!

hahahaha. nice.

 

[sp4rk]

Why would BA be raining on this parade given that they are a prime lender? Odd?

 

[imherkimer]

BA has been anti-Tesla from the beginning. Always running down the stock and the company.
This is nothing new. BA is the WORST Bank in the US, probably the most corrupt.
At any rate, seems to have had little effect on the stock price actually.

 

[joefee]

I fail to see what is unreasonable about 300k annual sales in 2020?

2030 sales could break down like this :

40k Model S
50k Model X (I think at this point in the game, the Model X will actually be more popular than the S)
100k Gen 3 Sedan
100k Gen 3 CUV
10k Gen 3 Roadster.

I would say 2 US factories 1 European in operation (3 more on the drawing board in Europe & Asia)

300K Model S (85, P85, P85+ 35% reduced price taken off the market in 2020)

150K Model S 2.0 convertible P150
170K Model S 3.0 AWD P150
125k Model X
155k Gen 3 Sedan
125k Gen 3 SUV
40k Gen 3 Roadster Super Car
200 Tesla Truck

 

[sp4rk]

BA has been anti-Tesla from the beginning. Always running down the stock and the company.
This is nothing new. BA is the WORST Bank in the US, probably the most corrupt.
At any rate, seems to have had little effect on the stock price actually.

Forgive my (perpetual) naivete ... then why did TM select them for loans?
I have found that since obtaining the loan from them the service has been so bad that I am thinking of paying off the load, like NOW; even though it is dirt cheap.
Applying for it was like crossing the road. (Bad analogy?)
I cannot even get them to do an automatic monthly payment!

 

[DaveT]

I fail to see what is unreasonable about 300k annual sales in 2020?

2030 sales could break down like this :

40k Model S
50k Model X (I think at this point in the game, the Model X will actually be more popular than the S)
100k Gen 3 Sedan
100k Gen 3 CUV
10k Gen 3 Roadster.

2030 is when over half of all new cars sold will be electric (Elon thinks a few years before that).

Tesla will be probably selling millions of Gen3 cars by then.

- - - Updated - - -

Forgive my (perpetual) naivete ... then why did TM select them for loans?
I have found that since obtaining the loan from them the service has been so bad that I am thinking of paying off the load, like NOW; even though it is dirt cheap.
Applying for it was like crossing the road. (Bad analogy?)
I cannot even get them to do an automatic monthly payment!

Tesla's financing partners are USBank and Wells Fargo (True Cost of Ownership | Tesla Motors).

- - - Updated - - -

Reading DaveT's post made me think about my sell orders... let me ask if this is a good strategy.

I have ten TSLA lots and I have "stop loss" orders on all of them... currently set to between $84 and $93. Most of these lots were purchased at prices well below this. So unless there is a massive drop in the stock outside normal hours, I have a pseudo guarantee of a certain (large) level of profits.

I modify these ten sell orders from time to time... mostly when the stock rises to all-time highs. It's my intention to keep the top sell order limit to 85% of the all-time high. This way I am allowing for 15% volatility. If the stock falls a bit, I leave them as they are; so far none of them have triggered because the stock price recovers. However, if after several down days the stock falls to (say) 20% below its all-time high, then one or two of my sell orders will trigger, taking some profits off the table but not abandoning the stock altogether (since maybe it is just one more large swing downwards before another miraculous recovery).

So given the $120 currently I would modify my ten lots to sell at $93 thru $102. (which I am about to do)

If the stock rises on Monday to (say) $122 - even intraday - I could modify them to sell at $95 thru $104.

Any time the stock falls, I hold my orders as they are - but if the stock rises, I adjust them upwards.

Does this sound conservative enough and yet still focused on effectively taking reasonable profit?

(BTW I understand our nightmare scenario: if, heaven forbid, a catastrophic event occurs for TSLA outside trading hours, and the stock opens much much lower, below all of my stop loss orders, all of my lots will trade more or less immediately at the new low price - and not even at my stop limits)

I personally don't recommend stop loss orders for Tesla because Tesla is a high-growth stock and will naturally be very volatile on it's rise up. We can see volatile swings of 20-30%. This is only natural and to be expected. One of the reasons for this is because valuation on a high-growth stock is tricky and also because momentum traders and hedge funds like to play the up and down swings which adds to its volatility.

Also, when your stop loss order gets executed that should probably be more a signal for you to buy more shares because the stock has dip $20%+. But in your case you will be selling shares and likely taking a tax hit (unless it's in a tax-deferred account).

Further, when you sell shares at 20-25% off, then it can be challenging to re-enter. The reason is because you might be looking for it to dip further to re-enter, but what's likely going to happen is the stock will recover and will recover faster than you think. It might quickly rise again to new highs and then you're left with a difficult decision to re-enter then but with less shares (which will be very painful).

So, let's say you have a stop loss order for $104 and the stock is trading at $122 now. Then let's say before Q2 earnings, the stock has a major downswing and dips to 104. Your stop loss order gets executed. But at $104, you really ought to be buying more shares, not selling. Then, let's say the stock recovers quickly to $105 and after Q2 hits $135+. Basically, your hit with a tax bill from selling your shares at $104 and now you can't buy even the same amount of shares you had before.

A better approach would be when the stock rises to a price where you're uncomfortable and you think it has significant risk of going down, then hedge your long stock positions by buying option puts (maybe a few to several months out). That way, if the stock goes down your puts will rise in value and when it's gone down significantly you can sell your puts for a profit. This way you don't have to sell you core long position (and incur tax consequences if your in a non-ira account).

I choose to hold TSLA shares with no stop loss and plan to keep my shares for a very, very long time. I am constantly researching though to make sure the fundamentals of the company haven't deteriorated which would be a big warning sign. But so far the company fundamentals are only improving.

 

[AudubonB]

Sp4rk: Regardless of whether BoA is or is not a lender to TM, there exists a so-called Chinese Wall between commercial banks' lending arms and their investment analysis arms. This is so that investors can have confidence in analysts' commentaries and recommendations.

Take ALL the above with a massive grain or railcar of salt. It is, however, SEC-mandated (rather, I think, federal legislation). But if you think analysts aren't aware of where their paychecks and yearly performance reviews and year-end bonuses come from....have I got a Yugo to sell you!

Regarding the article itself: if it contains a major thesis, it is that no auto maker ever has been able to grow its production at a 7-year CAGR of 48% (did anyone check that math? It might be worth verifying). However, I will respond that no auto maker before TM has started out with a plant designed to produce 500,000 vehicles per year - very comfortably larger even than the 300K figure around which he builds his argument.

Plus, of course, the world's best car......

 

[augkuo]

A stop loss order does not guarantee that you will get your limit amount in a catastrophic scenario. If NUMMI burns down and it turns out Tesla had made an error insuring it, nobody will pay $100 for your shares. The stock price will fall through your limits, and then you will be selling your shares at whatever fire-sale price someone is willing to pay that day. Whether the disaster happens within trading hours or outside doesn't matter much.

Your approach may work in terms of you feeling protected. Several people on this forum have seen their positions being taken out by downward spikes followed by very rapid rebounds. The paradox of your approach is that you are saying that you are not willing to sell your shares at $120, but if the price fell to $95-104 you would be willing to sell.

A better way to securing your gains could be to take profit on some of your "lots" at the current high prices, and then rather ride out dips with the remaining shares (or even get back in for a second ride with the original money).

Just to illustrate Don's point, ACN went from $41.94 to zero and closed at $41.09 in a day during the flash crash of 2010. A stop-loss order means that if the price falls below your threshold, you're willing to sell it at any price including zero. You probably want to do a stop-limit order as well so that if your stop-loss order gets triggered, you have a minimum that you'd want to sell it for.

 

[Jack6591]

Larry Bird and Magic Johnson made me a lifelong fan of the NBA. The battles between the Celtics and Lakers during the 80's were nothing short of epic. The back and forth between Tesla shorts and longs, just like that.

Would have it any other way?

 

[Soflason]

That BOA piece is negative (and misleading). Trying to benchmark the 300,000 vehicles sold estimate by only looking at luxury vehicles seems unfair, see the quote below:

"We analyzed the lifecycle of over 130 vehicles categorized as luxury by Ward’s Auto, the result of which indicate that approx. 70% reach peak volume within the first 8 quarters of launch. In other words, if Tesla’s vehicles follow a pattern similar to the industry norm, volumes could begin leveling off within the next year, rather than growing into perpetuity as the current share price would suggest."

... as this doesn't even take into consideration that the lion share of upcoming sales (to get to the 300,000 number) should be coming from Tesla's non-luxury, lower priced, higher volume Gen III vehicle.


But, on a positive note, at least the CEO of Stock Twits, interviewed on Yahoo Finance earlier today, still has some Tesla enthusiasm as evidenced by his discussion of Tesla at the end of the interview (around the 3 minute 25 sec mark):
“Valuations Don’t Matter:â€￾ Howard Lindzon Explains ‘Eclectic Investing’ | Daily Ticker - Yahoo! Finance

 

[kevin99]

Larry Bird and Magic Johnson made me a lifelong fan of the NBA. The battles between the Celtics and Lakers during the 80's were nothing short of epic. The back and forth between Tesla shorts and longs, just like that.

Would have it any other way?

I absolutely love this epic battle. I told my family since I start investing on TSLA, it is like living in a movie, a thrilling Wall Street plot where I get to play a role while all these drama unfolding on a daily basis.

 

[DaveT]

New all-time closing high of 121.61.

But not too much excitement on this thread about this. I guess this is something we're all just getting used to.

 

[EVNow]

I would say 2 US factories 1 European in operation (3 more on the drawing board in Europe & Asia)

300K Model S (85, P85, P85+ 35% reduced price taken off the market in 2020)

150K Model S 2.0 convertible P150
170K Model S 3.0 AWD P150
125k Model X
155k Gen 3 Sedan
125k Gen 3 SUV
40k Gen 3 Roadster Super Car
200 Tesla Truck

Interesting that you think Model S+X will get sold a lot more than Gen 3. Usually not the way the market operates, given the income distribution.

 

[ModelS8794]

That BOA piece is negative (and misleading). Trying to benchmark the 300,000 vehicles sold estimate by only looking at luxury vehicles seems unfair, see the quote below:

"We analyzed the lifecycle of over 130 vehicles categorized as luxury by Ward’s Auto, the result of which indicate that approx. 70% reach peak volume within the first 8 quarters of launch. In other words, if Tesla’s vehicles follow a pattern similar to the industry norm, volumes could begin leveling off within the next year, rather than growing into perpetuity as the current share price would suggest."

... as this doesn't even take into consideration that the lion share of upcoming sales (to get to the 300,000 number) should be coming from Tesla's non-luxury, lower priced, higher volume Gen III vehicle.

Gen 3 is described by Musk as a competitor to BMW 3-Series, Audi A4... these are entry-level luxury auto category cars.

John's data here encompasses cars in this class such as Lexus IS, Infinity G35/37, and BMW 1-series. Though oddly it doesn't include Audi A4 or BMW 3 or 5 series. I also note it doesn't include Mercedes C-Class or E-Class... in fact, i wonder if the list purposefully leaves off cars where current quarter figures are all-time highs, i.e. where 'peak quarter' isn't know yet. Would seem to defeat the purpose of the analysis if that were the case. anyway, here's the cars he used:

IMO, the biggest flaw I can see in his analysis is the assumption that Gen3 will price at $30k ASP in 2017 and go down from there, to $28k by 2020. I believe his ASP is off by at least 30-40% and makes a HUGE difference in terms of the volume of sales demanded by his various scenarios to justify current valuations. The same mistake was made across the board by the sellside when Model S was in development... ASP has turned out much much higher than anticipated, even excluding regulatory credits.

(The second biggest flaw I see is in his assumptions about Model X sales levels)

 

[c041v]

(The second biggest flaw I see is in his assumptions about Model X sales levels)

That's an interesting table representing an eclectic bunch. I love that the fact that the Porsche 924 is on there. What I took out of this, is that a 40-60 KWh Model X will peak in sales after ~6 years. (Based on Acura MDX, BMW X6, Mercedes GL/M, Lexus RX) It could even be argued that offering a smaller version sometime after will also sell (BMW X3, Mercedes GLK) I'd be really curious to see numbers for the Acura RDX, Audi Q5, BMW X5 and, Lexus GX/LX)