Short-Term TSLA Price Movements - 2013

[fjm9898]

Curt, Kind of why I said this:

Recall means added expenses and short term losses. Meaning short term the stock is going to take it badly.
longs will see this as an improvement to make one the best cars only better.

I dont articulate my words in a way you like and i have a very short an pungent way of speaking and I apologize for that. In short I am talking about a market reaction on the daily. Its going to cost them some cash and the market might think EPS or growth rate in the near term and the stock will take a hit because it was an unforeseen expense. Hence they would sell off on an emotional response. I am not say it would be for the right reasons, just saying i would expect it to happen due to the preconceived negative volatility people still have on Tesla in the short term. Hence why the first fire tanked the stock, nothing happened to change the company at that time, it was just an emotional response to the event.
Longs here on TMC would think it a worth while investment to make the car better and safer then it already is and a few bucks here and there will not hurt the long term goals of the company.

 

[Curt Renz]

But Curt, Short term Stock prices do not only reflect the actual (non emotional?) value of a company, now or what is expected in the future. There is also a perceived (emotional?) value ascribed to the company/stock that can affect the short term stock price. Yes?

Yes, but in this case I expect emotions will be relieved by an announced fix that shows the company is absolutely dedicated to safety, even if it is costly. I suspect that most of those negative emotions were already demonstrated over the last month and particularly last week as panicked sellers envisioned the worst case scenarios. That is what classically creates market bottoms and buying opportunities.

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Curt, Kind of why I said this:



I dont articulate my words in a way you like and i have a very short an pungent way of speaking and I apologize for that. In short I am talking about a market reaction on the daily. Its going to cost them some cash and the market might think EPS or growth rate in the near term and the stock will take a hit because it was an unforeseen expense. Hence they would sell off on an emotional response. I am not say it would be for the right reasons, just saying i would expect it to happen due to the preconceived negative volatility people still have on Tesla in the short term. Hence why the first fire tanked the stock, nothing happened to change the company at that time, it was just an emotional response to the event.
Longs here on TMC would think it a worth while investment to make the car better and safer then it already is and a few bucks here and there will not hurt the long term goals of the company.

See my answer to AlMc in post #12743.
EDIT: Now I see that both of my replies have been entered into the same post.

 

[fjm9898]

Yes, but in this case I expect emotions will be relieved by an announced fix that shows the company is absolutely dedicated to safety, even if it is costly. I suspect that most of those negative emotions were already demonstrated over the last month and particularly last week as panicked sellers envisioned the worst case scenarios. That is what classically creates market bottoms and buying opportunities.

See my answer to AlMc in post #12743.

Yes i guess we will just see what time will tell. I am just believing on the negative settlement around the stock to put a recall in the negative column. Hence why I am waiting to see how any of this would play out and wait on the sidelines.

 

[DaveT]

In short I am talking about a market reaction on the daily. Its going to cost them some cash and the market might think EPS or growth rate in the near term and the stock will take a hit because it was an unforeseen expense. Hence they would sell off on an emotional response. I am not say it would be for the right reasons, just saying i would expect it to happen due to the preconceived negative volatility people still have on Tesla in the short term. Hence why the first fire tanked the stock, nothing happened to change the company at that time, it was just an emotional response to the event.
Longs here on TMC would think it a worth while investment to make the car better and safer then it already is and a few bucks here and there will not hurt the long term goals of the company.

I don't think a recall would necessarily cause a the stock to move down even on the daily. I think it will depend largely on the details of the recall, the costs, and also to what extent does the recall fix actually fix/solve the problem. If the recall fix actually is a convincing fix to the problem and doesn't cost a fortune, then I would actually expect the stock to move up because this bolsters Tesla's long-term prospects which make up the bulk majority of the share price. If the recall is not convincingly a solid solution to the problem, then I could see the stock price move sideways or down.

 

[fjm9898]

I don't think a recall would necessarily cause a the stock to move down even on the daily. I think it will depend largely on the details of the recall, the costs, and also to what extent does the recall fix actually fix/solve the problem. If the recall fix actually is a convincing fix to the problem and doesn't cost a fortune, then I would actually expect the stock to move up because this bolsters Tesla's long-term prospects which make up the bulk majority of the share price. If the recall is not convincingly a solid solution to the problem, then I could see the stock price move sideways or down.

Once again, i dont disagree with this and i think its true. I am just saying the stock is beat down and it seem like any news that would present itself face value as negative will be traded that way.
Not saying i am right, just saying i have a wait and see approach to TSLA at the moment and would not be surprised for a negative reaction, but i am not going to bet on it and buy puts.

 

[Curt Renz]

Yes i guess we will just see what time will tell. I am just believing on the negative settlement around the stock to put a recall in the negative column. Hence why I am waiting to see how any of this would play out and wait on the sidelines.

The current high valuation of the company is essentially an anticipation of great success for Gen III. More than anything, Model S is a showcase to demonstrate the viability of electric cars and Tesla Motors in particular to the general public. Considerable sacrifices can be made in the current profitability of Model S, if it will insure that Gen III gains huge acceptance by car buyers.

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I don't think a recall would necessarily cause a the stock to move down even on the daily. I think it will depend largely on the details of the recall, the costs, and also to what extent does the recall fix actually fix/solve the problem. If the recall fix actually is a convincing fix to the problem and doesn't cost a fortune, then I would actually expect the stock to move up because this bolsters Tesla's long-term prospects which make up the bulk majority of the share price. If the recall is not convincingly a solid solution to the problem, then I could see the stock price move sideways or down.

Well stated, Dave.

 

[AlMc]

Curt and Dave T: I respect your opinions greatly but only time will tell. While I believe the long term prospects for Tesla are great, I believe the market will extract a short term cost (dip in price) with any acknowledgement that there is a problem with the security of the battery against damage/fire. This will be exploited by the media/organizations that would wish EVs to fail and will create uncertainty about the ability of TM to continue to execute its plan. A plan that has been executed almost flawlessly to date.

I do hope I am wrong as I am an S owner, stock holder and true believer in the TM/EV mission. The dip that I suspect may happen will probably be short term but if no positive future guidance is provided about the elimination of supply constraints will probably result in a medium term consolidation/sideways movement of stock price.

 

[brysondad]

Stock prices do not go down due to unexpected expenses, if what is spent is expected to add substantial long-term value to a company. They would only tank if the costs could bankrupt the company. Anticipated future value is baked into share prices. That’s why currently barely profitable Tesla Motors shares are valued so highly today. If anyone attempted to sell due to short-term costs that could greatly enhance future value, someone would buy from them immediately rather than have to pay a much higher price in the future. The latter investor would reap a large profit while the former would have sold at a loss.

i'm sorry, but pass around what you are smoking. Expense (especially unexpected) = risk. No one ever tells you the expense/detour will bankrupt or severely hurt an enterprise. Stuff like this is always clear from hindsight.

 

[Convert2013]

I have removed myself emotionally from Tesla after the 3rd fire. Last week was the most difficult week since I invested in Tesla, and it was the emotional attachment to Tesla and TSLA (large investment amount) that had made life very difficult and expectations unfair. Public sentiment right now (from my interactions with friends over the weekend is) : great car, great company, but I would not buy the stock or the car just now, until I hear from NHTSA and Tesla on the go forward plan. What happened last week could impact future sales and cause some cancellations, as well as introduce cost to Tesla's not-so-deep pockets in case of an expensive recall. Too many unknowns. But I feel Elon will bite the bullet and do the right thing for the sake of the brand and his commitment to Tesla. I don't know HOW that will affect the stock. Impossible to guess with all the unknowns. I am still bullish long term.

 

[justthateasy]

Once again, i dont disagree with this and i think its true. I am just saying the stock is beat down and it seem like any news that would present itself face value as negative will be traded that way.
Not saying i am right, just saying i have a wait and see approach to TSLA at the moment and would not be surprised for a negative reaction, but i am not going to bet on it and buy puts.

Curt and Dave T: I respect your opinions greatly but only time will tell. While I believe the long term prospects for Tesla are great, I believe the market will extract a short term cost (dip in price) with any acknowledgement that there is a problem with the security of the battery against damage/fire. This will be exploited by the media/organizations that would wish EVs to fail and will create uncertainty about the ability of TM to continue to execute its plan. A plan that has been executed almost flawlessly to date.

I do hope I am wrong as I am an S owner, stock holder and true believer in the TM/EV mission. The dip that I suspect may happen will probably be short term but if no positive future guidance is provided about the elimination of supply constraints will probably result in a medium term consolidation/sideways movement of stock price.

I have removed myself emotionally from Tesla after the 3rd fire. Last week was the most difficult week since I invested in Tesla, and it was the emotional attachment to Tesla and TSLA (large investment amount) that had made life very difficult and expectations unfair. Public sentiment right now (from my interactions with friends over the weekend is) : great car, great company, but I would not buy the stock or the car just now, until I hear from NHTSA and Tesla on the go forward plan. What happened last week could impact future sales and cause some cancellations, as well as introduce cost to Tesla's not-so-deep pockets in case of an expensive recall. Too many unknowns. But I feel Elon will bite the bullet and do the right thing for the sake of the brand and his commitment to Tesla. I don't know HOW that will affect the stock. Impossible to guess with all the unknowns. I am still bullish long term.

Can I be the fourth musketeer? :smile:

Like you guys, I value and respect the opinions of everyone who posts here. However, there is also a time when we need to take a big step back and see things from another perspective. There is a lot of optimism about Tesla Motors (the company) and personally, I'm very optimistic about Tesla. However, we must not allow that optimism to cloud the reality happening to TSLA (the stock).

In a previous post, I made mention that a schism seems to have developed here in the forum between those of us who made defensive plays last week in order to protect profit or prevent further [short-term] losses and get back in after the volatility settles or at a better price and those who decided to stay in. I think that all of us who got out (for now) respects the other side's decision to stay in. However, it feels like there's some negativity towards those of us that got out. I don't think that there is a side that is definitively correct but we all did what we needed to.

A lot, and I mean A LOT has happened in one week since TSLA was pushed off a cliff. In my opinion, it isn't over as TSLA will be trading based off perception in the short-term.

 

[mershaw2001]

I think that the negativity that you are seeing is the people who remain long dislike the approach of "i got out and I won't get in until $X per share is reached" with X being significantly lower than the current price. My take has always been that if you are standing there saying "i'll get in when this gets lower" there is going to be someone else ahead of you in line with a price that is a little over yours and he is going to get in before you and keep the price from ever falling to the level you want. It is only companies that I truly don't want to be a part of that fall (blackberry!), and it's only companies that everyone is clamoring to get into that fall (tesla going up from 177 to 195). The companies where half of the investors want in, but are waiting, are the ones that go up. As it inches up, person by person gives up and buys in so as to not miss the rush.
That's my take on it. Furthermore, I see the posts of "I'll buy it at 60 dollars" and think "well at 60 i'm completely screwed and my analysis of this stock would have been so wildly wrong that this other person can't be right".

Oh I want to add: I think that there are a lot of funds and individual investors who have been waiting and would be interested in getting into tesla. People at my work are like "if they resolve the fire, I'll buy 100 shares". I still think there's more demand out there for tesla than people are thinking, but at the same time I don't think we'll go up over 195 for a while because that will provide significant resistance.

 

[Curt Renz]

i'm sorry, but pass around what you are smoking. Expense (especially unexpected) = risk. No one ever tells you the expense/detour will bankrupt or severely hurt an enterprise. Stuff like this is always clear from hindsight.

You’re right. I should have phrased it to say that stocks do not usually move down much further, if what was once an unexpected expense becomes expected, and the price has already been discounted to account for the new expectation. In the case of a company like Tesla Motors whose hefty valuation is mainly based on a high volume product that won’t be produced for a few years, the market may be more willing to accept (and perhaps demand) added expenses for an earlier more limited production model that is designed to prove the viability of the later mass produced model.

 

[Curt Renz]

I think that the negativity that you are seeing is the people who remain long dislike the approach of "i got out and I won't get in until $X per share is reached" with X being significantly lower than the current price. My take has always been that if you are standing there saying "i'll get in when this gets lower" there is going to be someone else ahead of you in line with a price that is a little over yours and he is going to get in before you and keep the price from ever falling to the level you want. It is only companies that I truly don't want to be a part of that fall (blackberry!), and it's only companies that everyone is clamoring to get into that fall (tesla going up from 177 to 195). The companies where half of the investors want in, but are waiting, are the ones that go up. As it inches up, person by person gives up and buys in so as to not miss the rush.
That's my take on it. Furthermore, I see the posts of "I'll buy it at 60 dollars" and think "well at 60 i'm completely screwed and my analysis of this stock would have been so wildly wrong that this other person can't be right".

Oh I want to add: I think that there are a lot of funds and individual investors who have been waiting and would be interested in getting into tesla. People at my work are like "if they resolve the fire, I'll buy 100 shares". I still think there's more demand out there for tesla than people are thinking, but at the same time I don't think we'll go up over 195 for a while because that will provide significant resistance.

In my case I haven’t been following the thread closely enough recently to know who bailed out and who stayed onboard. So I don’t know about any antagonism. But what you say reminds me of when I first came to this thread earlier this year with my $38 shares and several posters who had recently sold out at $40 were discussing whether to get back in at $32? $30? $28? I told them that this was a stock with great potential to run away from them, and they would likely find themselves chasing it. And that is indeed what happened. I’ve seen something like this so often with many stocks, although usually not to the extent as with TSLA. When former shareholders begin talking about the level that would motivate them to get back in, as you note, they almost invariably discover that there are always less risk averse investors who will buy at higher prices and tend to keep them shut out as the price begins zooming upward.

 

[mershaw2001]

I told them that this was a stock with great potential to run away from them, and they would likely find themselves chasing it. And that is indeed what happened. I’ve seen something like this so often with many stocks, although usually not to the extent as with TSLA. When former shareholders begin talking about the level that would motivate them to get back in, as you note, they almost invariably discover that there are always less risk averse investors who will buy at higher prices and tend to keep them shut out as the price begins zooming upward.

Yeah, I learned that most likely from you, six months ago.

 

[marvinat0rz]

But Curt, Short term Stock prices do not only reflect the actual (non emotional?) value of a company, now or what is expected in the future. There is also a perceived (emotional?) value ascribed to the company/stock that can affect the short term stock price. Yes?

A bit late in replying to this. The "correct" market cap of a company is the discounted and dilution-adjusted value of the exact revenues the company will earn through its entire existence. And the "correct" stock price is exactly given by this. But this number is impossible to calculate, even probabilisticly, so investors try to approximate it every time a piece of new information that affects the future, appears. In practice, stock prices swing a lot more than this because you can also make money by predicting what other investors will do in reaction to a piece of news. E.g. the current earnings report was positive and in my view underscored Tesla's long-term prospects, but it would have been the correct short-term move to sell the stock, because other investors misunderstood the contents of the report.

This type of prediction of and reaction to other investors' behaviors is a large part of what causes the large, random, sometimes irrational fluctuations in stock prices, and you could certainly call it an "emotional value" if that makes sense for you. Long-term, the stock price will have to get closer to the true long-term value of the company. If it is too low, a big investor could buy it and keep all the profits himself. When you are a shareholder, you are an owner of the company and a portion of all the company's assets and profits legally belong to you. The company just manages them on behalf of you.

 

[Jack6591]

I am frankly a little surprised at the reactionary emotion of some of the investors here. Any product with the potential to disrupt the status quo across multiple industries is going to wreak havoc. Did anyone believe this wouldn't be a brawl?

In the words of Betty White, grow a v@$&!. The fight continues, and will for a long time to come. Invest accordingly.

 

[AlMc]

I am frankly a little surprised at the reactionary emotion of some of the investors here. Any product with the potential to disrupt the status quo across multiple industries is going to wreak havoc. Did anyone believe this wouldn't be a brawl?

In the words of Betty White, grow a v@$&!. The fight continues, and will for a long time to come. Invest accordingly.

I agree with your sentiment with those that think 'the sky is falling'. However, I think it is prudent that an investor that is trying to protect the value of their portfolio take steps when either the company they invest in either fails to meet 'number' expectations (not TM at this time in my opinion) or there is an incident during the growth of that company that may make other investors leery (emotional reaction) of the value of the company/stock (IMO, the current situation)

By the definition on this TMC forum I guess I would consider myself a 'weak long' and wear that moniker proudly. If I can identify an incident that will cause a major dip in the stock and sell off part of my position to protect gains, great. Those gains can then be used to invest in TM again...maybe I will be lucky and buy in at a lower price..maybe not, or utilize those gains to invest in areas that I see will have a better return.

 

[marvinat0rz]

Any more info about the "rumor" from the Apple Rumors guy concerning the possibility of a recall? I think this morning's poor open is either due to people acting on this rumor, or otherwise that someone knows something the rest of us don't...


Update: An alternative theory is that the market is really, really disappointed that Clooney didn't like his roadster a few years ago. At this point, I think this is equally likely...

 

[Sunnyday]

I wonder when Elon's blog post is forthcoming?

 

[aznt1217]

wow these price movements are insane.