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Short-Term TSLA Price Movements - 2013
- Thread starter Robert.Boston
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Mario Kadastik
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borat99
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FredTMC
Model S VIN #4925
Mario Kadastik
Active Member
Citizen-T
Active Member
Pretty confident that Benzinga has an agenda. Or they are being fed stories by someone that does.
Sunnyday
Member
I'd welcome another capital raise, especially if it helped them reduce execution risk on the supply chain side, or if it helped them accelerate the implementation of their business plan. A 5% equity dilution would raise $1 billion. Check out Paul Graham's Equity Equation, which is a simple formula that helps startup founders decide if they want to give up X% of their company to investors. Same formula applies here. The formula is 1/(1-x). X = the % you give up. 1/(1-x) is the threshold of benefit the investment must yield for the existing shareholders to yield a positive return on the dilution. If Tesla did a stock offering that resulted in a 5% dilution, then our formula is 1/.95 or 1.0526. This means that as long as the investment improves our outcome (risk reduction, profitability, competitiveness, stronger balance sheet, etc) by at least 5.3%, the capital raise makes sense.
Or, they could do it with convertible debt like this last round.
In the last month, Elon hinted or outright stated Tesla would look to build new factories closer to customers, so new factories in Europe, asia and the US. To Phil Lebeau he hinted at the prospect of Tesla building its own battery factory. Most people are basing their most optimistic TSLA projections on the stated 500,000 unit per year production capacity of Fremont. Imagine four more 500k/yr factories, and additional strategic vertical integration of the supply chain. The time to raise money is when you don't need it, and at good terms with minimal dilution or cost. Timing is important. This is land grab time. It's time to capture the demand and build barriers to competitive entry. Time to dot the country with thousands of solar-powered Superchargers. Time to announce a truck. Time to come out with Gen III earlier than expected.
Or, they could do it with convertible debt like this last round.
In the last month, Elon hinted or outright stated Tesla would look to build new factories closer to customers, so new factories in Europe, asia and the US. To Phil Lebeau he hinted at the prospect of Tesla building its own battery factory. Most people are basing their most optimistic TSLA projections on the stated 500,000 unit per year production capacity of Fremont. Imagine four more 500k/yr factories, and additional strategic vertical integration of the supply chain. The time to raise money is when you don't need it, and at good terms with minimal dilution or cost. Timing is important. This is land grab time. It's time to capture the demand and build barriers to competitive entry. Time to dot the country with thousands of solar-powered Superchargers. Time to announce a truck. Time to come out with Gen III earlier than expected.
My understanding was that they went from $124 because DB upgraded on July 26, 2013. (I couldn't find anything announced on July 25). So 124.07 - 137.49 is about a 11% increase before it fell back down. Today was $166.22 - $180.47 is about a 9% increase. So if it follows like the past, tomorrow has a chance to make a new high before falling back down.
I'd suspect that there may be another offering in the works because TSLA needs to expand. I'd also welcome it because that would allow me to get in lower if I timed it right. At the moment, I bought something else while waiting for TSLA to pull back.
The news hit about the upgrade premarket on 7/26. There was a gap up before open.
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mershaw2001
I'm short the short sellers
Well that was a nice run, I think it's time to start taking a little off the table for myself. That move, to me, had the appearance of flushing a large number of shorts out. If we don't see another hard hit of good news in the next day that makes this pop again, I think we'll see some turn over in the 175-180 range as shorts cover. I don't think there will the same enthusiasm to crazy-short tesla, at least not to the same degree that there was at $160 when every article on SA was about how awesome a short tesla is.
Without that short fuel, I decreased my core TSLA share position by 20% today at 178. I kept my options for 185 for the end of next week, because they're just $2.60 each and they'd cover me if we see another crazy pop, but I expect them to expire worthless. Furthermore, I think that the public is less likely to chase tesla at 180 than it would be at 160. Personal opinion.
My reasoning for taking a little off the table: the cat's out of the bag, we here on the board anticipated a blast in the nov earning reports. Now that analysts are saying it's not going to be a disaster, our information advantage is slightly gone. There's still plenty of catalysts, the big one being that we could hear about a battery partner. However, I believe that elon likes to play the stock like a game- his goal is to maximize shareholder value, and double pumping the stock right now to 220 would disadvantageous to that goal because at some point the stock would have to take a rest. If he shoots all his good news at once, he's left with nothing in case of a fall in the price, and a pop and drop hurts shareholder morale. It is my opinion that he wants an orderly increase in the stock price, and not a pop and fall. That's healthiest for all investors, and we know he likes investors and wants them to be rewarded.
Now, I am starting to acknowledge some of the short's arguments, no point in listing them, but in every argument there is just a hint of truth (what if true competition emerged for the Gen III? 2% chance that would ever happen, but it's not 0% chance). Furthermore, on every stock, no matter the stock, there is a point where it is too high. That point for tesla might be 500 right now, but it might be 220. If tesla were to hit 500 today, i know i'd sell down to just 100 shares. I have a "fair price" in my head, and we made a 15 dollar move closer to that fair price. I'd need to see new battery agreements, model x reservations that are awesome, or new battery technology, or an equivalent, to move my fair price up. So, we're far under the price, just less so. When we hit that price, i'd anticipate having 1/2 of the position i have now.
I guess i felt like I had to justify finally decreasing my position, as I've been increasing it over the past few months with purchases at 28 dollars, 110, 140, and 164.
Without that short fuel, I decreased my core TSLA share position by 20% today at 178. I kept my options for 185 for the end of next week, because they're just $2.60 each and they'd cover me if we see another crazy pop, but I expect them to expire worthless. Furthermore, I think that the public is less likely to chase tesla at 180 than it would be at 160. Personal opinion.
My reasoning for taking a little off the table: the cat's out of the bag, we here on the board anticipated a blast in the nov earning reports. Now that analysts are saying it's not going to be a disaster, our information advantage is slightly gone. There's still plenty of catalysts, the big one being that we could hear about a battery partner. However, I believe that elon likes to play the stock like a game- his goal is to maximize shareholder value, and double pumping the stock right now to 220 would disadvantageous to that goal because at some point the stock would have to take a rest. If he shoots all his good news at once, he's left with nothing in case of a fall in the price, and a pop and drop hurts shareholder morale. It is my opinion that he wants an orderly increase in the stock price, and not a pop and fall. That's healthiest for all investors, and we know he likes investors and wants them to be rewarded.
Now, I am starting to acknowledge some of the short's arguments, no point in listing them, but in every argument there is just a hint of truth (what if true competition emerged for the Gen III? 2% chance that would ever happen, but it's not 0% chance). Furthermore, on every stock, no matter the stock, there is a point where it is too high. That point for tesla might be 500 right now, but it might be 220. If tesla were to hit 500 today, i know i'd sell down to just 100 shares. I have a "fair price" in my head, and we made a 15 dollar move closer to that fair price. I'd need to see new battery agreements, model x reservations that are awesome, or new battery technology, or an equivalent, to move my fair price up. So, we're far under the price, just less so. When we hit that price, i'd anticipate having 1/2 of the position i have now.
I guess i felt like I had to justify finally decreasing my position, as I've been increasing it over the past few months with purchases at 28 dollars, 110, 140, and 164.
TSLA at $177.92
Here are some of my thoughts on current TSLA price action.
I've mentioned several times the bullish flat base pattern forming over the past 3-4 weeks. I also mentioned how IBD recommended a $173.80 buy point (on high volume) based on a 3-weeks-tight pattern.
Anyway, I'll share a bit of the reasoning behind these technical terms. So, after a stock has made a big run (ie., TSLA going from $100 to $165), there's going to be inevitable profit-taking at various levels. What's happened over the past few weeks is that since TSLA reached the $165-ish level, there's been people cashing out (especially after the quick rise from $135 to $170). Usually what might happen is there would be downward pressure. However, with TSLA the stock held strong in a relatively tight channel (mostly 164-169). This is very bullish because this means that there were buyers who were holding up the stock and preventing the stock from trending downward with all the profit-taking. Typically, in this case it's not the retail buyers but rather it's the institutional buyers who would be providing this price support because the institutional buyers are larger in force. Know we don't know if it was a few or many institutional/big buyers providing this strong support, but that's irrelevant at this point.
When TSLA was quiet the past weeks, it's easy to assume that the uptrend has stopped and TSLA will remain consolidating. However, in TSLA's case this 3-4 week "rest period" is/was not a sign that TSLA has stopped moving up, but rather that it's pausing to let people profit-take and gaining a strong base for the next leg up.
There's a lot of talk going around about TSLA being overvalued and as a result the stock won't be going up that much in the near-term. However, I think this isn't accurate thinking. Sure, there's people who think TSLA is overvalued, but that's largely irrelevant to whether TSLA can keep rising or not. The reason being is people who think TSLA is overvalued typically just stand on the sidelines (or if they're super convicted, they're short). But the people who are largely responsible for the TSLA's continued uptrend are the buyers, and these buyers don't need to represent the larger media/analyst views on the stock. If there are enough passionate buyers of TSLA, then the stock has strong upward pressure. These buyers can be retail or institutional, but mostly institutional. So, really the question is if TSLA has enough institutional (and retail to an extent) support and enthusiasm to continue it's uptrend. Note, it doesn't take a ton of institutions. TSLA really just needs a few big ones to be passionate/committed and this provides a strong base of support.
So what the bullish flat base pattern (or three-weeks-tight pattern) showed was that institutional (or big buyer) support was strong and not letting the stock drop under $164 (or for not very long). In fact, at times the strong $164 support was quite remarkable.
At some point during the bullish flat base pattern (or three-weeks-tight pattern), the selling pressure starts to fade (volume shrinks) and it becomes more evident that the stock isn't going to go much lower. At this point (and maybe with the help of a catalyst like a PT upgrade by an analyst, etc), the stock starts to rise and people want to catch it before it keeps rising since they know there's a strong bottom base.
This is when the rising price action continues (usually with higher volume than the bullish flat base pattern period) and you see the upward price action.
So, today with the DB price target increase yesterday after hours, TSLA gapped up this morning and kept rising in the early morning. It took some time to break the $174-ish barrier but this is natural because it was a previous all-time high. When a stock reaches a previous ATH there's a lot of selling pressure as previous buyers get scared/anxious and think it's an opportunity to cash out or lock profits. Other buyers who bought at the ATH and were looking to recoup losses also try to cash out. But once the stock passes the ATH barrier, then there isn't that strong selling pressure at the price point so the stock can continue to move higher. That's what TSLA did after it broke through the $174 barrier.
It's typical to assume that TSLA will come down in price from here because it jumped from $166 to $177 in a day. However, the bullish flat base pattern provide a strong base for TSLA to continue it's run and to continue rising in price.
Also, with today's breakout into new ATHs, TSLA now attracts more traders as the stock starts to move again. Thus, I would expect to see decently high volume tomorrow and over the next few to several days as TSLA makes a lot of movement.
As TSLA moves up, the stock attracts both longs, shorts and scalpers. The longs don't want to miss out before it keeps rising. The shorts think it's even a better short at higher prices. And scalpers want to ride the volatility for a quick gain. All this means is that I'm expecting there to be volatility over the next several days.
I personally see a greater probability of the stock rising from here than falling. I'd say 70% chance it keeps rising into the 180s (and maybe 190s), and 30% chance it stays in the 170s or falls back to 160s.
I side with the stock continuing to rise because the stock has a lot of good signs. It's got a good base in the 160s that provides support for a push into the 180s and higher. It's broken out to new ATHs and that can attract new buyers (and shorts too). And there seems to be strong institutional support as well.
I do allot some chance (30%) for this breakout to stall in the 170s or to fall back, largely because I'm a bit wary of the overall market right now. If a large sell-off occurs (I have no strong leaning on when/if/how this might happen), then it could affect TSLA price support as institutions hold back on their purchases and even take some profits.
Overall though, I'm bullish on TSLA regarding it's short-term price action. And I'm even more bullish on it's long-term prospects. One of the great things about investing in TSLA is that you have access to real-time crowdsourced data (not just investor-related stuff but things like how demand is going and how people are liking/disliking the car and products). Most of TMC is not about the stock but rather the car, and it's a great way to keep pulse with the company and it's prospects.
Another great thing about TSLA is that it's a company/industry that easy to understand. It's not like some biotech company or enterprise software. It's a car company and it's easy to understand because we all drive cars and know all the major manufacturers. There is however the tech aspects of TSLA (ie., EVs, batteries, software, disruption, etc) that an investor needs to understand, but that can be gained through reading TMC and other places. Overall though I'd much rather put my money into something I can understand like cars than a company (ie., biotech) that I really don't get.
Finally, another great thing about investing in TSLA long-term is that TSLA is addressing such a huge market and it has 10-20 years of fast growth ahead of it. The auto market is a $1.5 trillion market, and is in the early stages of being disrupted by battery/electric cars. This disruption won't happen in a few years like smartphones, but rather will take 10-20 years because of the pace of change is much slower with autos than with phones. This can be an advantage to a TSLA investor because it provides some stability to the stock. In other words, it makes it into a long-term stock that can be held for many, many years. Sure, there will be ups and downs but as long as TSLA's long-term future looks great, then most investors can weather any storms by just holding the stock.
One final thought, I do agree that at some point TSLA needs to slow down (ie., act like other stocks). However, I still think TSLA's got a lot of volatility left in it (ie., high short interest) and that volatility will ultimately be in the up direction. I think there's a temptation to think or conclude that since TSLA has risen so much over the past several months that it's got to stop rising. However, stocks can do strange things, and the price isn't determined by what we feel comfortable with but rather what buyers are willing to pay. And people/institutions can pay very high prices for the rare companies that can demonstrate rapid revenue growth in huge addressable markets.
Here are some of my thoughts on current TSLA price action.
I've mentioned several times the bullish flat base pattern forming over the past 3-4 weeks. I also mentioned how IBD recommended a $173.80 buy point (on high volume) based on a 3-weeks-tight pattern.
Anyway, I'll share a bit of the reasoning behind these technical terms. So, after a stock has made a big run (ie., TSLA going from $100 to $165), there's going to be inevitable profit-taking at various levels. What's happened over the past few weeks is that since TSLA reached the $165-ish level, there's been people cashing out (especially after the quick rise from $135 to $170). Usually what might happen is there would be downward pressure. However, with TSLA the stock held strong in a relatively tight channel (mostly 164-169). This is very bullish because this means that there were buyers who were holding up the stock and preventing the stock from trending downward with all the profit-taking. Typically, in this case it's not the retail buyers but rather it's the institutional buyers who would be providing this price support because the institutional buyers are larger in force. Know we don't know if it was a few or many institutional/big buyers providing this strong support, but that's irrelevant at this point.
When TSLA was quiet the past weeks, it's easy to assume that the uptrend has stopped and TSLA will remain consolidating. However, in TSLA's case this 3-4 week "rest period" is/was not a sign that TSLA has stopped moving up, but rather that it's pausing to let people profit-take and gaining a strong base for the next leg up.
There's a lot of talk going around about TSLA being overvalued and as a result the stock won't be going up that much in the near-term. However, I think this isn't accurate thinking. Sure, there's people who think TSLA is overvalued, but that's largely irrelevant to whether TSLA can keep rising or not. The reason being is people who think TSLA is overvalued typically just stand on the sidelines (or if they're super convicted, they're short). But the people who are largely responsible for the TSLA's continued uptrend are the buyers, and these buyers don't need to represent the larger media/analyst views on the stock. If there are enough passionate buyers of TSLA, then the stock has strong upward pressure. These buyers can be retail or institutional, but mostly institutional. So, really the question is if TSLA has enough institutional (and retail to an extent) support and enthusiasm to continue it's uptrend. Note, it doesn't take a ton of institutions. TSLA really just needs a few big ones to be passionate/committed and this provides a strong base of support.
So what the bullish flat base pattern (or three-weeks-tight pattern) showed was that institutional (or big buyer) support was strong and not letting the stock drop under $164 (or for not very long). In fact, at times the strong $164 support was quite remarkable.
At some point during the bullish flat base pattern (or three-weeks-tight pattern), the selling pressure starts to fade (volume shrinks) and it becomes more evident that the stock isn't going to go much lower. At this point (and maybe with the help of a catalyst like a PT upgrade by an analyst, etc), the stock starts to rise and people want to catch it before it keeps rising since they know there's a strong bottom base.
This is when the rising price action continues (usually with higher volume than the bullish flat base pattern period) and you see the upward price action.
So, today with the DB price target increase yesterday after hours, TSLA gapped up this morning and kept rising in the early morning. It took some time to break the $174-ish barrier but this is natural because it was a previous all-time high. When a stock reaches a previous ATH there's a lot of selling pressure as previous buyers get scared/anxious and think it's an opportunity to cash out or lock profits. Other buyers who bought at the ATH and were looking to recoup losses also try to cash out. But once the stock passes the ATH barrier, then there isn't that strong selling pressure at the price point so the stock can continue to move higher. That's what TSLA did after it broke through the $174 barrier.
It's typical to assume that TSLA will come down in price from here because it jumped from $166 to $177 in a day. However, the bullish flat base pattern provide a strong base for TSLA to continue it's run and to continue rising in price.
Also, with today's breakout into new ATHs, TSLA now attracts more traders as the stock starts to move again. Thus, I would expect to see decently high volume tomorrow and over the next few to several days as TSLA makes a lot of movement.
As TSLA moves up, the stock attracts both longs, shorts and scalpers. The longs don't want to miss out before it keeps rising. The shorts think it's even a better short at higher prices. And scalpers want to ride the volatility for a quick gain. All this means is that I'm expecting there to be volatility over the next several days.
I personally see a greater probability of the stock rising from here than falling. I'd say 70% chance it keeps rising into the 180s (and maybe 190s), and 30% chance it stays in the 170s or falls back to 160s.
I side with the stock continuing to rise because the stock has a lot of good signs. It's got a good base in the 160s that provides support for a push into the 180s and higher. It's broken out to new ATHs and that can attract new buyers (and shorts too). And there seems to be strong institutional support as well.
I do allot some chance (30%) for this breakout to stall in the 170s or to fall back, largely because I'm a bit wary of the overall market right now. If a large sell-off occurs (I have no strong leaning on when/if/how this might happen), then it could affect TSLA price support as institutions hold back on their purchases and even take some profits.
Overall though, I'm bullish on TSLA regarding it's short-term price action. And I'm even more bullish on it's long-term prospects. One of the great things about investing in TSLA is that you have access to real-time crowdsourced data (not just investor-related stuff but things like how demand is going and how people are liking/disliking the car and products). Most of TMC is not about the stock but rather the car, and it's a great way to keep pulse with the company and it's prospects.
Another great thing about TSLA is that it's a company/industry that easy to understand. It's not like some biotech company or enterprise software. It's a car company and it's easy to understand because we all drive cars and know all the major manufacturers. There is however the tech aspects of TSLA (ie., EVs, batteries, software, disruption, etc) that an investor needs to understand, but that can be gained through reading TMC and other places. Overall though I'd much rather put my money into something I can understand like cars than a company (ie., biotech) that I really don't get.
Finally, another great thing about investing in TSLA long-term is that TSLA is addressing such a huge market and it has 10-20 years of fast growth ahead of it. The auto market is a $1.5 trillion market, and is in the early stages of being disrupted by battery/electric cars. This disruption won't happen in a few years like smartphones, but rather will take 10-20 years because of the pace of change is much slower with autos than with phones. This can be an advantage to a TSLA investor because it provides some stability to the stock. In other words, it makes it into a long-term stock that can be held for many, many years. Sure, there will be ups and downs but as long as TSLA's long-term future looks great, then most investors can weather any storms by just holding the stock.
One final thought, I do agree that at some point TSLA needs to slow down (ie., act like other stocks). However, I still think TSLA's got a lot of volatility left in it (ie., high short interest) and that volatility will ultimately be in the up direction. I think there's a temptation to think or conclude that since TSLA has risen so much over the past several months that it's got to stop rising. However, stocks can do strange things, and the price isn't determined by what we feel comfortable with but rather what buyers are willing to pay. And people/institutions can pay very high prices for the rare companies that can demonstrate rapid revenue growth in huge addressable markets.
Loved your post DaveT...makes sense. This board has been great and especially yours and Sleepy's and Curts posts...has helped me stick with my own convictions to buy a ton of options early on and stay long throughout from the 30s up to now. I realize there will be a 20% pull back/correction somewhere which i know will be painful temporarily but I'm not going to try to time it...may not happen until the stock gets to 300 or could happen tomorrow....hope your right about your sentiment and that it keeps going up for the next few days
Norbert
TSLA will win
A difference, though perhaps a minor one, is that 7/26 didn't create a significant ATH immediately. (The ATH two days later was not quite as significant as today's.)
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