Short-Term TSLA Price Movements - 2014

[chickensevil]

The reduction in warranty outlays by Tesla could be driven by two factors: lower warranty costs experienced per car per year and expiration of warranty (on Roadsters) with the actual expenses lower than original allotment. Without analyzing the real and all numbers neither mr. Kass nor anybody else can make any credible conclusions. What, of course, one might keep in mind, is that mr. Kass has enough of a conflict of interest here to take his unsubstantiated and imprecise conclusions (something is fishy) with skepticism.

That's fair. All I was suggesting was the timing of it seeming to be a little bit "well planned". I mean it has been said for some time now, that it seemed like they intentionally held back on Q3, just to cause a bit of a drop (I mean they of course didn't plan for the fires... but still) which they knew would flip back to quite a huge beat in Q4, which would cause the shorts to lose their shirts all over again. There have just been too many "coincidences" for at least some of this to not have been planned. Not that I am at all complaining about it. And I am certainly not suggesting they are doing anything illegal here. Just playing the market to THEIR advantage.

Maybe I am wrong, maybe it is all just coincidence. I am perfectly fine with that too.

 

[chronopublish]

That's fair. All I was suggesting was the timing of it seeming to be a little bit "well planned". I mean it has been said for some time now, that it seemed like they intentionally held back on Q3, just to cause a bit of a drop (I mean they of course didn't plan for the fires... but still) which they knew would flip back to quite a huge beat in Q4, which would cause the shorts to lose their shirts all over again. There have just been too many "coincidences" for at least some of this to not have been planned. Not that I am at all complaining about it. And I am certainly not suggesting they are doing anything illegal here. Just playing the market to THEIR advantage.

Maybe I am wrong, maybe it is all just coincidence. I am perfectly fine with that too.

I'm not sure what you think Tesla held back for Q3. The only reason they didn't beat street expectations is because there were a thousand cars "in the pipeline" for European deliveries. They still delivered more cars than they guided for. Besides, most of the price drop was due to the fires, which as you pointed out Tesla certainly did not expect.

 

[InTheShadows]

I'm not sure what you think Tesla held back for Q3. The only reason they didn't beat street expectations is because there were a thousand cars "in the pipeline" for European deliveries. They still delivered more cars than they guided for. Besides, most of the price drop was due to the fires, which as you pointed out Tesla certainly did not expect.

They also didn't beat the street because we were counting vins and 6500-7000 deliveries had been theorized as a possibility (including by myself) and the street picked up on it and wanted 7000 deliveries.

Interesting though, now that I think about it, we hit that number the next quarter.

 

[mershaw2001]

New Paulo Santo article on seeking alpha. I absolutely love that guy- he tries so hard to short momentum stocks and fails miserably. I had to comment that he is the best contrarian indicator out there, rivaling our own ckessel. =) jk, ckessel.

 

[RobStark]

Bank of America raises TSLA price target to $75. LOL

 

[skandy]

Bank of America raises TSLA price target to $75. LOL

That's more than a 15% increase, not bad

 

[chickensevil]

Bank of America raises TSLA price target to $75. LOL

That PT was released a week ago. So doesn't help with today's price.

 

[Chickenlittle]

New Paulo Santo article on seeking alpha. I absolutely love that guy- he tries so hard to short momentum stocks and fails miserably. I had to comment that he is the best contrarian indicator out there, rivaling our own ckessel. =) jk, ckessel.

for fun you should read his previous articles all the same estimating numbers that are totally inaccurate and claiming growth slowing over the past year.

tesla reports so late that half the new qtr is done before they report. they already know what they have done so far, and know at least 2-4 weeks ahead what they will do. the only uncertaintly, if any is in the last two weeks of the current qtr. so i would find it extremely difficult to believe they miss on number of cars made.

 

[Curt Renz]

On November 15, 2013 the NHTSA opened its preliminary evaluation of two Model S incidents. On it's website it states that, "Most PEs are resolved within four months." This coming Saturday will mark four months.

Major changes in the constituents of the S&P 500 often take effect immediately following a quarterly options expiration. Those changes are often announced on the previous Wednesday. Quarterly options will expire at the end of next week.

If the NHTSA were to clear the Model S, and the S&P 500 were too commence inclusion of Tesla Motors at nearly the same time, the short squeeze could be quite intense.

 

[Robert.Boston]

Major changes in the constituents of the S&P 500 often take effect immediately following a quarterly options expiration. Those changes are often announced on the previous Wednesday. Quarterly options will expire at the end of next week.

At its current valuation, Tesla Motors would rank at about #150 among S&P 500 companies in market cap. The challenge in getting included is stringing together enough quarters of sufficiently sound financial performance.

 

[Curt Renz]

At its current valuation, Tesla Motors would rank at about #150 among S&P 500 companies in market cap. The challenge in getting included is stringing together enough quarters of sufficiently sound financial performance.

That’s s good point, Robert, implying that Tesla Motors’ market capitalization would be in the top third of the S&P 500.

Here’s a link to the S&P 500 inclusion criteria: http://www.ifaarchive.com/media/images/pdf files/sp500_rules_generalcriteria.pdf

Within the introduction: “First and foremost, S&P Indices are not rules-based; all changes are fully discretionary and are determined by the Index Committee based upon public information.”

Within the conclusion: “Remember, these are only guidelines and not rules, and on occasion Standard & Poor’s may go outside these guidelines in choosing Index candidates.”

Your concern appears related to this sentence: “The profitability criteria are four quarters of positive net income on an operating basis.” Tesla Motors met that guideline during the four quarters of 2013.

 

[mershaw2001]

Curt,
When a stock is included in the indices, are the ETFs and other funds that track these indices given advanced warning (so would they be buying in advance of that wednesday announcement) or do they have to buy the stock at the time of the announcement?

 

[ggr]

Curt,
When a stock is included in the indices, are the ETFs and other funds that track these indices given advanced warning (so would they be buying in advance of that wednesday announcement) or do they have to buy the stock at the time of the announcement?

I don't think it would be legal to give them advanced warning, and the stock jump that usually accompanies the news would seem to indicate that they aren't.

 

[FluxCap]

Thanks for the timing notes, Curt!

On NHTSA: I too am playing various strategies to capitalize on whatever bump (even small) we may get out of that news. However -- government agencies like NHTSA operate on time horizons that are often extended with no warning, especially in high-profile matters in which they want to be extra thorough. Sometimes this time horizon is compressed when they get pressure from above (meaning the President's direct appointees), but that pressure can also backfire and make them drag their feet. So could be this week, could be next month or later. Just food for thought.

 

[Robert.Boston]

To continue this musing about the impact of being elevated the S&P 500 ...

Suppose that 5% of the value of S&P 500 companies is held as part of some indexed fund. If TSLA were added to the index, that means that fund managers would need to buy 5% * $29.42bn = $1,471 million of TSLA, about 6.13 million shares. That's a sizable portion of the non-insider float.

 

[Curt Renz]

Curt,
When a stock is included in the indices, are the ETFs and other funds that track these indices given advanced warning (so would they be buying in advance of that wednesday announcement) or do they have to buy the stock at the time of the announcement?

I assume, mershaw, that such an announcement is made available to the entire world outside the S&P committee at the same time. For anyone to receive and act upon it early, would involve a crime similar to what is popularly known as front-running.

- - - Updated - - -

To continue this musing about the impact of being elevated the S&P 500 ...

Suppose that 5% of the value of S&P 500 companies is held as part of some indexed fund. If TSLA were added to the index, that means that fund managers would need to buy 5% * $29.42bn = $1,471 million of TSLA, about 6.13 million shares. That's a sizable portion of the non-insider float.

Indeed, Robert, and something similar could have been said before TSLA inclusion in the Nasdaq 100. Nevertheless, that was accomplished in July.

- - - Updated - - -

Thanks for the timing notes, Curt!

On NHTSA: I too am playing various strategies to capitalize on whatever bump (even small) we may get out of that news. However -- government agencies like NHTSA operate on time horizons that are often extended with no warning, especially in high-profile matters in which they want to be extra thorough. Sometimes this time horizon is compressed when they get pressure from above (meaning the President's direct appointees), but that pressure can also backfire and make them drag their feet. So could be this week, could be next month or later. Just food for thought.

You're welcome, FluxCap. A lengthy waiting period like this one would seem to imply there is no immediate concern that public safety is being jeopardized. That bodes well for an all-clear. I really don't see how they could embarrass their German counterpart (and their own previous assessment of highest level safety) by doing anything other than closing the investigation without requesting a recall.

 

[Blurry_Eyed]

The reduction in warranty outlays by Tesla could be driven by two factors: lower warranty costs experienced per car per year and expiration of warranty (on Roadsters) with the actual expenses lower than original allotment. Without analyzing the real and all numbers neither mr. Kass nor anybody else can make any credible conclusions. What, of course, one might keep in mind, is that mr. Kass has enough of a conflict of interest here to take his unsubstantiated and imprecise conclusions (something is fishy) with skepticism.

The anecdotal evidence I gather in my conversations with people on the service team is that they are not as busy as they were previously with car repairs/rework. The improved quality of the cars coming out of the factory has reduced the load in repairing/reworking items and the older cars are all being addressed as they come in for annual service (or as owners bring them in to get things fixed). For example, my Sig # 532 is just about perfect now and Tesla has taken care of all the issues I had with my car, so I would suspect going forward, there would be minimal impact from me in terms of warranty service (other than future issues that might arise) and I would think that older cars would start to require less and less work to correct the early factory quality issues and early stage engineering issues Tesla worked through.

So my thought would be that the improved quality plus getting all the initial cars fixed is reducing the cost in relation to what it was earlier on in the Model S's life. But as vgrinshpun is right to point out, nobody can really make a credible conclusion without seeing all the real numbers that only corporate has access to.

 

[FluxCap]

You're welcome, FluxCap. A lengthy waiting period like this one would seem to imply there is no immediate concern that public safety is being jeopardized. That bodes well for an all-clear. I really don't see how they could embarrass their German counterpart (and their own previous assessment of highest level safety) by doing anything other than closing the investigation without requesting a recall.

I completely agree on outcome -- I believe an "all-clear" on passenger safety will definitely be the verdict. I was speaking to the expected time horizon of NHTSA's completion of work, based on my own experience in various Federal agencies. Statements like "most [insert tasks] will be completed within four months" do not imply any sort of deadline, and are provided as loose estimates only, so I simply wanted to urge caution trading on such expectations in the short-term.

 

[Curt Renz]

I completely agree on outcome -- I believe an "all-clear" on passenger safety will definitely be the verdict. I was speaking to the expected time horizon of NHTSA's completion of work, based on my own experience in various Federal agencies. Statements like "most [insert tasks] will be completed within four months" do not imply any sort of deadline, and are provided as loose estimates only, so I simply wanted to urge caution trading on such expectations in the short-term.

I certainly agree with your point that the timing remains up in the air. It's a quick order for a recall due to immediate safety concerns that would have been a problem. But we're at the point where the issue could be dismissed any day now. The close spacing of two non-injurious road debris incidents was apparently one of those statistical anomalies that occasionally occur. The NHTSA may have wanted to wait a few months to be sure that is the case. So most of their testing may have simply involved sitting around while following the news.

Meanwhile, my car will soon be recalled by GM for an ignition switch defect that has resulted in thirteen deaths. It is not an NHTSA mandated recall, despite the agency being made aware of the problem in 2007. If the NHTSA could ignore that GM situation, surely they won't flag Tesla over a couple of high-speed Model S accidents that resulted in no injuries.

 

[FredTMC]

I certainly agree with your point that the timing remains up in the air. It's a quick order for a recall due to immediate safety concerns that would have been a problem. But we're at the point where the issue could be dismissed any day now. The close spacing of two non-injurious road debris incidents was apparently one of those statistical anomalies that occasionally occur. The NHTSA may have wanted to wait a few months to be sure that is the case. So most of their testing may have simply involved sitting around while following the news.

Meanwhile, my car will soon be recalled by GM for an ignition switch defect that has resulted in thirteen deaths. It is not an NHTSA mandated recall, despite the agency being made aware of the problem in 2007. If the NHTSA could ignore that GM situation, surely they won't flag Tesla over a couple of high-speed Model S accidents that resulted in no injuries.

Man, I feel as if we've waited foreever for NHTSA's all-clear. Any day now is fine by me... Zzzzzzzzz