Short-Term TSLA Price Movements - 2014

[chickensevil]

Elon cannot pontificate a "Solar Electric Economy" and at the same time state that the stock price is "a little high".

Why not? If he really felt it was high in the short term it was just what he felt the company was worth... nothing more... that means if he was a day trader of his own company he might have actually sold off shares... I mean that is what we do when we think the stock is a bit overvalued right? Sell off a bit, wait for the drop, buy back in. How is this any different? Just because he controls ~23% of the shares doesn't mean he knows anymore than anyone else what the market value of Tesla is... and since he is esentially only accumulating shares and not selling he is actually causing price inflation in his own little way... Because although there is 126M shares, when only ~100M of them are actually available to everyone else, that ~23% might as well not exist. Supply and demand.

I'm just saying, the overvalued, undervalued, "this porridge tastes just right"... it doesn't matter, it is technically just the opinion of one person (albeit someone whose opinion holds a lot of weight in the company... but one person all the same) and nothing more than that. SOMEONE thought the stock was worth 290 a week ago or the stock would have never made a trade at that price... someone thought the stock was worth no longer even worth 249 or that trade wouldn't have happened today. Value is all in the eye of the beholder, and when the collective mass comes together some kind of semblance of a "fair price" is established.

So to respond to your statement, what if he had said, the stock price was "a little low"... would you be complaining then? His job as the CEO is not to directly baby sit the shareprice, but to execute the company while growing it as large as they can, as quick as they can, and make as much money as they can along the way. That translates into a stock price.

I know you are a little upset about his comments, I was too. His comments were poorly timed for my own short term plays and I barely exited with a profit. Better to pull back now, because the next time we run up to 290 it will be ready for it, and there won't be as much of a question on the state of the value of the company.

- - - Updated - - -

No, Elon was bluntly honest as usual. Both statements long and short are true. Long term, TSLA is going to be higher. Short term, the stock price was being a bit generous given what's left to get done.

There's no confusion at all. Folks here in TSLA's camp would almost universally say TSLA has long term upside, just as Elon did. You'll also find a number of folks (yourself included at times) that think it was high for right now.

Oh, ok, thanks for clearing that up I see how you take it now, and it makes sense. I think it was just the way you said it, threw me off for a bit. Hard to tell people's intent sometimes in text.

 

[Curt Renz]

And I'm obviously fine with that also as are most people on this forum I guess; I do still think that a CEO who can, without warning, say something which causes the stock to sink understandably scares many people.

Indeed, and Elon's comments earlier this month on the share price apparently gave Jonas free rein to write what he did with no expectations of repercussions from the company. Jonas virtually said so. He may even have surmised (correctly or not, but certainly not been told) it is what was wanted. However, he may have received protests from GM and Ford last week when he rated them poorly while still praising Tesla.

Phil LeBeau has asked Elon that same question before and received essentially the same answer. I suspect that Elon knew the question was likely and answered as he had already prepared in his mind. It may have aided in enticing new employees who would be given initially lower priced shares or options. That may be a great concern to him right now. He may have been confident they could eventually sell at much higher prices. However, as CEO and Board Chairman, his first responsibility is his fiduciary duty to current shareholders. I would have answered Lebeau with, "The determination of the proper share price is a matter for investors and analysts. My job is to insure that the company is eventually quite profitable. The Gigafactory we have announced here today is part of that." That should have served as a setup for LeBeau to follow-up with a Gigafactory question. Then that would have been the headline and not the CEO's opinion of the share price. It would have been honest, yet not pumping or deprecating the investment. He can still have some control over the share price appreciation rate through the timing of factual announcements. Those are not as likely to be twisted in a wild manner by the media or Wall Street.

 

[FluxCap]

And perhaps a form of contrition to Mary Barra and Mark Fields. General Motors and Ford may have threatened to cut off Adam Jonas from information or complained to executives at Morgan Stanley, after the poor ratings and price targets Jonas gave them last week while stating that he sees “Tesla Motors as the only US auto manufacturer stock offering any upside to fair value.”

That is my current hypothesis. Pressure from any number of powerful interests to distort and amend his prior statements, even though he knows the truth - Tesla's dominance will result in outright elimination / bankruptcy of multiple ICE manufacturers, and the ones left will be fast followers at best.

 

[SteveG3]

My main gripe (or one of them at least) with Adam Jonas' note today was that if he is going to say that the stock is overpriced then he should make a compelling argument for that. For example: Our Feb 2014 $320 price target was a mistake for "X" reasons, and our new price target is "$X" for for the following reasons."

However, his note is an exhibit of nonsense and doesn't help me to understand why he thinks TSLA is overvalued.

All I get from his note is that he's bullish on ICE tech progress and thinks human driving may end in 15 years.

Regarding his Moore's Law comment (as applied to ICE), I think it's stretching it to say that he doesn't believe what he wrote. I think he believes in all that he wrote today. And it just shows how convoluted and illogical his thinking/beliefs are.

okay, we're both agreed that the note had a bunch of nonsense including some pretty out there statements re ICE improvements to come and the impact of autonomous driving vehicles. (Fwiw, more out there than anything I think I've ever seen from John Lovallo!) Anyway, we agree about all that, and the bits we don't agree about I don't think matter so much.

 

[Curt Renz]

And he said it best in Japan, something along the lines of "I only own 23% or so of the company, so if the shareholders don't like me, then they can totally vote with their shares and fire me". Clearly the vast majority of the shareholders love our CEO or we wouldn't allow him to continue running the company

Someone who owns 23% of a company's shares, is both the CEO and Board Chairman, and has appointed people to all the offices and directorships entitled to large numbers of shares/options is unlikely to ever be fired. I'm a shareholder and I like Elon, but I feel free to question his publicly expressing his opinion of the share price.

 

[vgrinshpun]

But now the stock is no longer undervalued, and the stock is running off of high expectations (gravitating toward TSLA 2.0 expectations of Tesla becoming one of the major manufacturers). And this concerns Adam Jonas, since he doesn't believe Tesla is going to become a major manufacturer. He thinks they're potential is that of a small manufacturer.

I am not sure whether this expectation is based on the actual internal TM goals.

I think that they are aiming to "Create the most compelling car company of the 21st century by driving the world's transition to electric vehicles" , but there is no any indication that they aspire to become one of the major car manufacturers. Their core technology is electric drive train and battery storage, and the best way to leverage this is to sell technology, or may be components and technology to other "Family" and "Subcompact/City" vehicle manufacturers. The reason they got into production of cars is because nobody else was producing compelling EVs. So they need to lead the way by demonstrating that compelling EV can be produced profitably. This is largely what MS/MX and Model III platforms are about.

I think that Q2 2014 ER call remark by Elon that TM will become one of the most valuable companies of the world is based on the vision of becoming premium vehicle manufacturer, battery storage manufacturer, and leader/provider of the core technology to other automobile manufacturers.

See attached page from the Tesla Motors Company overview published in 2011

http://files.shareholder.com/downloads/ABEA-4CW8X0/3473357330x0x494001/dd297293-ec2d-4dc5-8db4-63d491fb6bd0/Company_Overview_Q3_2011.pdf

 

[Lump]

I don't have the exact quotes but in the last couple of months EM has said something like he can be fired if people didn't like the job he was doing, while factually true it struck as kind of strange why he would say something like that when he owns so much stock & is Chairman, it was out of the blue kind of comment, anyone else remember hearing them?

 

[chickensevil]

Someone who owns 23% of a company's shares, is both the CEO and Board Chairman, and has appointed people to all the offices and directorships entitled to large numbers of shares/options is unlikely to ever be fired. I'm a shareholder and I like Elon, but I feel free to question his publicly expressing his opinion of the share price.

I'm sure that vote of no confidence would originate from the board... but I am just saying, that this isn't like Facebook where the kingdom is wholly controlled by one man. I am sure if enough shareholders got upset about something Elon was doing it would intiate a chain of events to kick him out. I highly doubt such a scenerio would ever play out though. (And I really don't think anyone would want it to because Elon has been very great for and to the company.)

And I am not saying you can't dislike or question his opinion of the shareprice. I too think he is likely the last person I would ever ask what the shareprice should be right now... because that isn't (and shouldn't) be his focus. It was just his *gut* feeling on the stock, and nothing more.

Blame today's decline on MS and the overall market more than anything, I think AJ was just using the Elon comment as a safety zone for his own bearish statements... "Look the stock is overvalued... I mean even Elon says so!" That is a cheap shot... nothing more. AJ should stand on his own analysis and not ride on the coat-tails of Elon to make his statements stick.

The whole this is just terrible the way it played out... Not at all how I expected the stock to fall apart... makes me sad how little tenacity investors actually have in the company...

 

[dmckinstry]

Dave, I'd say more that an uber-bull was revealed as being an uber bull also willing to play Wall Street games.

Going to what you highlighted, if those comments are meant to imply that ICE vehicles will start improving along the lines of Moore's law (as I think they are meant to but in cryptic language so as to limit the damage of having such an improbable statement on his resume), I simply do not believe Jonas could possibly actually believe it. I think this is simply a Wall Street game.

Certainly, the electronics may follow Moore's law, but there is an upper limit on the thermodynamic efficiency of any ICE that can never be exceeded, and I suspect that he is quite aware of that fact.

 

[austinEV]

Last year's Goldman "upgrade" vs now:

2013:

today:

Not so very different.

 

[ckessel]

The whole this is just terrible the way it played out... Not at all how I expected the stock to fall apart... makes me sad how little tenacity investors actually have in the company...

Keep in mind the market was horrible today giving an amplification effect. Solars were down huge across the board and Elon didn't say anything about them

 

[chickensevil]

I don't have the exact quotes but in the last couple of months EM has said something like he can be fired if people didn't like the job he was doing, while factually true it struck as kind of strange why he would say something like that when he owns so much stock & is Chairman, it was out of the blue kind of comment, anyone else remember hearing them?

yes, as stated above it was during the Japan Delivery and Press Conference (I don't know if stated elsewhere) and it was an appropriate response to the question asked which challenged the companies reasoning for rapid expansion and break even profits. (I believe, I might have the question/response tie a little off, but it was something up that alley, I am sure of it).

 

[Chickenlittle]

I don't have the exact quotes but in the last couple of months EM has said something like he can be fired if people didn't like the job he was doing, while factually true it struck as kind of strange why he would say something like that when he owns so much stock & is Chairman, it was out of the blue kind of comment, anyone else remember hearing them?

Yeah second time I have heard it. First was when he announced release of patents. Sometimes people get fatigued. I am not sure he may look for the excuse sometime. Who knows

 

[chickensevil]

Keep in mind the market was horrible today giving an amplification effect. Solars were down huge across the board and Elon didn't say anything about them

Oh no, I was one of the first today to point out that today would be rough even before I saw the MS note. Go back to like 7:30 this morning

I haven't forgotten. That was just a good (bad?) timing on many things coming together to cause a massive price drop. MS Note, China manufacturing, Oil Prices falling, The Fed meeting this week, Alibaba IPO, New Russian Sanctions, Scottland voting for independance... take your pick of events to cause the stock to drop... haha!

@AustinEV, so based on your chart the stock should mostly recover tomorrow, right?

 

[FANGO]

“1. EVs are failing categorically on a global scale. Tesla aside, nearly the rest of the auto industry's efforts to successfully commercialize pure electric propulsion have fallen well short of the mark. In fact, many of the worlds largest OEMs appear to have put major EV development on ice (See our note: EVs are Dead, Long Live Tesla from May 28th), pushing hydrogen as the future of emission free transport (see our note: Hydrogen Cars, a Bunch of Hot Air from June 25th). We would not underestimate the influence of the global industry to lobby for a substantial revision of existing CARB rules to slow down the pace of milestones they have little hope of achieving (besides Tesla). In fact, we expect a revision. Thankfully, Tesla is developing products that sell on attributes of consumer experience and sheer driving pleasure and are not dependent on government incentives. But the shot across the bow won't help the debate.”

Weak argument. Just because sales of other EVs are slow doesn’t mean Tesla’s sales will be impacted. If you’re going to say EV demand is slow and thus Tesla demand will be impacted and slowed, then he should state that as his reason why he thinks the stock is overvalued. Rather, he makes a very vague statement of EVs in general and doesn’t connect it to Tesla, Tesla demand, or TSLA’s stock price.

It's also important to note that sales of other EVs are *not* slow. In fact, sales of EVs of all types are growing very rapidly. Faster than hybrid sales were growing at the same time frame since their introduction. In the US, sales of all EVs are up 43% year over year.

In the past week or so, there have been a lot of headlines talking about declining sales of electric vehicles. These headlines are false. They lump in conventional hybrids and EVs into one category, and because there has been a slight decline in hybrid sales, it looks like all "electrified" car sales are declining. But when you take conventional hybrids out of the equation, which you should when talking about electric cars since conventional hybrids still run 100% on gas and 0% on electricity, EV sales are up across the board, there are almost no models with declining sales. The only significant one with some decline in sales is the Volt (down 12%) - but GM has been having a particularly hard time lately anyway, so that's not too surprising (even though the Volt is actually the only current GM model which has not been subjected to a recall in the last year). Also, in I believe June or July last year, Plug-In America was championing the 100,000th EV sold in the US. This week they noted that we're up to 250,000. That doesn't sound like slowing sales to me, literally more than doubling the install base in a year. The Leaf just had a record month in August. There was also that bloomberg article from a week or two ago talking about EV sales still being on the same exponential trajectory they've been on all along.

These are US numbers, not worldwide numbers, admittedly. But anyone who thinks that EV sales are slowing is simply wrong. They may be slower than some people's hopes or expectations, but they are not slowing, they are growing rapidly.

“Moore's Law can help liberate BTUs too.”

And of course this is even more laughable. The curve of battery improvements at a fairly rapid rate of 7-10% per year goes back many decades and shows no sign of stopping. Is anyone aware of a similar curve for internal combustion engines?

In terms of racing, here's an interesting historical look at how fast combustion engine-driven motorcycles have progressed over the last hundred years in one of the longest-held races in the world. Obviously much of these improvements are non-engine-related as well. You can also see how quickly EVs have progressed in the last 6 years: http://green.autoblog.com/2014/06/05/john-mcguinness-destroys-tt-zero-record-at-117-miles-per-hou/

edit: also, we should consider the possibility that the drop today was not really due largely to the MS note, but to market moves as a whole. There's a lot of red on my watchlist today and some of it is in the 9% range. The stock was also down in pre-market which I believe was before this note was released?

 

[austinEV]

@AustinEV, so based on your chart the stock should mostly recover tomorrow, right?

Why not? The situations are similar.

 

[SteveG3]

Certainly, the electronics may follow Moore's law, but there is an upper limit on the thermodynamic efficiency of any ICE that can never be exceeded, and I suspect that he is quite aware of that fact.

dmckinstry, thanks for breaking out where Jonas' suggestion falls flat.

agreed, I think he is quite aware of that. as I've said I think he was trying to create the impression of a scale of coming improvements to ICE vehicles which in fact he does not believe.

 

[Jack6591]

Do you believe that Tesla Motors is disrupting the automotive industry?

Do you believe that Tesla Motors is disrupting the fossil fuel industry?

Do you believe that Tesla Motors is disrupting the automotive repair industry?

Now explain why the stock is overvalued???

 

[Lump]

yes, as stated above it was during the Japan Delivery and Press Conference (I don't know if stated elsewhere) and it was an appropriate response to the question asked which challenged the companies reasoning for rapid expansion and break even profits. (I believe, I might have the question/response tie a little off, but it was something up that alley, I am sure of it).

Thanks, I kind of remember now.

Yeah second time I have heard it. First was when he announced release of patents. Sometimes people get fatigued. I am not sure he may look for the excuse sometime. Who knows

Oh yea, the patents given away for free, seems so long ago.

 

[chickensevil]

Why not? The situations are similar.

Good thing I kept the call side of my straddle I will take it!

Sell off my puts tomorrow first thing and hope the stock goes back up! If we come back to ~272 I will pull out a NICE profit from both sides of this action hahahaha!