Short-Term TSLA Price Movements - 2014

[DaveT]

If I recall, the short interest was 40% back when TSLA was in the 30's, so it doesn't seem like it's ever moved all that much. I guess that's why I'm unsure what the value is in knowing the short interest. The theory seems to be that it'd really emphasize a positive stock event over a fairly short duration, but if it was going to have that sort of impact wouldn't we have seen it at some point in the 15 months or so during TSLA's big rise? Seems like the rise and falls, though big, have been over long enough periods of time that the impact of the short interest would have been minimal.

Not trying to argue with anyone, just trying to understand. I've heard repeatedly how some catalyst will be a big deal and we'll see shorts covering, but as you noted the short interest has been fairly steady so even if some are covering it doesn't appear to have much overall impact.

Here's an example with what happened back in April-May of 2013.

Short interest on settled date 4/15/13 (since it takes 3 days to settle, it's reflective of 4/10/13) was 30.7M shares. Stock price was $41.86.

Short interest 6 weeks later (settlement date 5/31/13, reflective of 5/28/13) was 18.6M shares. Stock price was $110.33.

So in just 6 weeks the stock went up 150%. During that time 12M shares sold short covered (in other words, closed out their short position by buying back stock). Short covering was one of the factors that contributed to the huge price increase.

 

[ckessel]

Here's an example with what happened back in April-May of 2013.

Short interest on settled date 4/15/13 (since it takes 3 days to settle, it's reflective of 4/10/13) was 30.7M shares. Stock price was $41.86.

Short interest 6 weeks later (settlement date 5/31/13, reflective of 5/28/13) was 18.6M shares. Stock price was $110.33.

So in just 6 weeks the stock went up 150%. During that time 12M shares sold short covered (in other words, closed out their short position by buying back stock). This contributed (although there were other factors as well) to the huge price increase.

So, the short interest helped accelerate the move to the new stable(ish) high point and it would have taken longer without the short interest? Presumably there wasn't a squeeze, per se, since the price didn't have a sudden drop after that.

Edit: bah, can't give DaveT any more rep points yet for his helpfulness

 

[FANGO]

I've been following this form now for about 3 years and I'm not really sure how to use the information about the short interest. I don't feel like I've ever seen much of a short squeeze or at least nothing that seems to fit the prototypical definition of a temporarily vastly inflated price.

It's sort of academically interesting to see how prevalent the bear feeling is, but what does the short interest do as far as guiding your investment? Specifically short term investment given the name of this thread?

The way I see this isn't necessarily as "fuel for a short squeeze" (though that's how I saw it last April, and was going to make options bets at 40-60 strikes but couldn't at the time, grr), but that the existence of shorts means there are still people out there who "don't get it." And those people will eventually "get it." As long as there are still people who haven't heard of Tesla (unfortunately we don't have a metric for that), and people who have heard of Tesla but don't understand the long-term plan (which I consider short interest a metric of), then there is still potential upside. Only once everyone has heard of the company and everyone knows it's going up long term does the stock start to level off. See AAPL, which has short interest of 20 million on 800 million shares. It may well continue to go up, but it's not going to do it quickly, because everyone already knows about it. So that's the difference between a safe stock and a growth stock, to me. Safe stocks are ones where everyone gets it and is already on board, growth stocks are ones which still have people to convince. Some of the people might not be convinced, but most of them will. Unless, of course, the company fails, which is where the risk comes in. Personally, and I think everyone here agrees with me, I don't see TSLA failing. It could have failed a couple years ago, but as of the last year or so, it's been very obvious to me that it won't. The high short interest just signifies the people who haven't gotten the message that failure isn't going to happen at this point.

 

[DaveT]

So, the short interest helped accelerate the move to the new stable(ish) high point and it would have taken longer without the short interest? Presumably there wasn't a squeeze, per se, since the price didn't have a sudden drop after that.

Yes, that's one way to look at it. Another way to look at it was that the price on 4/10/13 of $41.86 (from my example) was a depressed price due to the the large 30.7M short position. In other words, without the large short position the stock should have been higher since the large short position is basically an extra 30M shares that are sold and added to the available shares.

So, in the 6 weeks (from my example) when shorts covered 12M shares sold short that removed 12M shares from being available and increased scarcity of shares. Add to that the increase in buying demand from new buyers wanting to buy into the stock and you've got a lot of upward pressure.

Short squeezes can have various forms. They could spike and then drop. They could spike, drop a bit and then go up again. They could spike, consolidate and then go up. Most of the times a "squeeze" is used in a loose way to signify a scramble of people buying the stock pushing the stock price upward. High short interest can add to this squeeze effect as you have more people who are needing to cover (ie., buy stock to close their short position) when the stock unexpectedly keeps rising.

 

[pz1975]

If it turns out to be true that Elon is visiting China in late March (ie. this week or weekend) then it is likely that some sort of China-specific reservation/demand announcement (+ maybe supercharger plans) would happen since there would be a lot of Chinese media covering the event and he would want to portray a very positive message there of his company. With the drop over the past month that TSLA has had on no news (following NASDAQ as others have pointed out), technical indicators showing the stock is now oversold with RSI on some sources lower than it has been since late November, and still quite a high short float, I think things might be lining up for one of those TSLA spikes that we know and love.

Like many here, I got greedy when TSLA was in the 250's thinking it would go higher and lost on some short-term calls. I have been waiting to buy more short/medium-term calls since we got into the low 240s, but starting accumulating 3-6 month out calls the last 2 days and also got some calls (235 and 240s) expiring April 4 to take a potential Elon announcement in China into play (not this week since it could happen over the weekend). Even if there isn't an announcement, I still think there is decent potential for the stock to drift back up considering the technical factors, but with big news we could get a major spike. Or the market could continue to tank and all of this could be for naught!

 

[ckessel]

Yes, that's one way to look at it. Another way to look at it was that the price on 4/10/13 of $41.86 (from my example) was a depressed price due to the the large 30.7M short position. In other words, without the large short position the stock should have been higher since the large short position is basically an extra 30M shares that are sold and added to the available shares.

Ah, ok, that helps solidify it in my mind. Lots of short interest sort of artificially inflates the number of shares on the market, which in turn artificially depresses the stock price.

 

[mershaw2001]

Something happening after hours? Telsa is up 2 dollars and it appears to be more than one trade. We have another tick at the 220.44 price, but some good 222 volume.

edit; i'll answer my own question, this appears to be in the news, though i'm not sure if it's the driving force behind the rise:
Rick Perry on Texas Tesla Ban: Maybe We Should Reconsider

 

[DaveT]

If it turns out to be true that Elon is visiting China in late March (ie. this week or weekend)...

I read that China deliveries would start in April and not March. (Barclays latest report mentioned this after they attended investors meetings in Europe with Tesla a couple weeks ago.)

 

[arashlzy]

Rick Perry news was out yesterday....whats interesting to me is the report of Elon's trip to China "by end of March"....that only leaves a few trading days. Just the fact that he is going is great news...but I think investors will be hanging on his every word trying to see how sales there are doing.

 

[30seconds]

ohio also passed bill that exempts 3 tesla stores from dealer requirements

 

[FredTMC]

ohio also passed bill that exempts 3 tesla stores from dealer requirements

Excellent!

 

[Lump]

ohio also passed bill that exempts 3 tesla stores from dealer requirements

Not yet...it's only a Senate panel that approved the proposal, still needs the full Senate but a step in the right direction

Ohio Senate Panel Approves Bill Allowing Tesla Stores - Bloomberg

 

[Curt Renz]

ohio also passed bill that exempts 3 tesla stores from dealer requirements

It got through an Ohio senate committee and now moves on through the legislative process. Tesla and the auto dealers have agreed to it, so it will likely become law. Two stores already exist in Cincinnati and Columbus, and new third one would likely be in Cleveland.

 

[drinkerofkoolaid]

All this good news, and not a word from Elon about it. Where is Elon? We still haven't seen the blog post he mentioned is coming, and he hasn't made any posts since his last blog post, aside from two very short replies. As someone pointed out, for the past week, Tesla has basically just been following the market, due to a lack of news. I think it also has something to do with the missing blog post that Elon said would be published last week.

Anyone else feel like Elon is about to release a deluge of positive news?

On an aside, take a look at the job postings on the Tesla website. Tesla is looking to hire a ton of new employees in California, Norway, China, Germany, and The Netherlands. Something big is coming.

 

[arashlzy]

All this good news, and not a word from Elon about it. Where is Elon? We still haven't seen the blog post he mentioned is coming, and he hasn't made any posts since his last blog post, aside from two very short replies. As someone pointed out, for the past week, Tesla has basically just been following the market, due to a lack of news. Anyone else feel like Elon's planning a 5 part deluge of positive news?

On an aside, take a look at the job postings on the Tesla website. Tesla is looking to hire a ton of new employees in California, Norway, China, Germany, and The Netherlands. WebRep

maybe he is packing for his trip? China? Cross country?

I am hoping he will release some big news soon.

 

[ckessel]

This is Spring Break. He may simply be taking a vacation with his family.

 

[PV4EV]

This is Spring Break. He may simply be taking a vacation with his family.

Maybe he went out for a drive. Like a 3,000 mile one. With the kids. And a camera crew !

 

[AlMc]

This is Spring Break. He may simply be taking a vacation with his family.

But that vacation is suppose to be a cross country drive with his sons in a model S (or model X??)

 

[techmaven]

All this good news, and not a word from Elon about it. Where is Elon?

I would bet that he is more than a little bit busy with the upcoming SpaceX launch... The one that has the landing legs for the first time and is sending Dragon to the ISS.

 

[AlMc]

It is rumored Elon will be in China before the end of March (6 days) anyone have confirmation of this? Also, anyone have confirmation on the 'spring break' trip cross country with his family? Spring break for his children week before or after Easter?