Short-Term TSLA Price Movements - 2014

[chickensevil]

Preface: I know nothing about business or engineering.

I see Tesla is doing everything right. Great product. Might change the world. So far, everything is progressing in an amazing way. They have to create all the things that enable the car to exist, the entire ecosystem - and they are. The chargers, the gigafactory. They're expanding to Europe and China.

It takes time to build stuff. You can't snap your fingers and make cars out of thin air. They're doing an astounding job so far.

They're not losing money so fast they have to close down, as in, nice dream, but it didn't work out.

In fact, they're making a bit of profit.

I wouldn't care if they didn't make a profit at this stage since they're new, and we're talking about a long term thing which will be HUGE. World changing. Takes time to build.

That's what I see as a (hopefully) reasonbley intelligent person who knows nada about business.

OK. Can someone explain to me why the stocks dropped?

It can't be that everyone else is crazy or stupid. I know there are lots of super smart people in finance.

It's possible that there are malicious forces at work (oil companies et al.).

It's possible that all these biz people are trapped in certain ways of thinking. If target X [fancy biz speak] was not met then FAIL. Obtuseness, in other words. Lack of imagination.

But I'd like to know if there are intelligent, not crazy, not malicious reason for what seems to me inexplicable.

If the stock drop sticks (keep in mind this is just AH trading, anything can happen tomorrow during normal hours), I would blame it on over exuberance again, which is very similar to why the stock dropped in Q3 (combined with some other catalysts). I don't see it dropping much more than it already has because of the heavy support from the 200 day average. But the fact is, people outside of the analysts were shooting for .22 non-GAAP EPS... we didn't hit that. Contrast that with Q4 where people were expecting and pretty much got the EPS right on the nose (again not counting analysts). So if it stays down it would be because people got too excited again, and now they are paying the price.

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My suspicion is that a lot of the trading is not done by humans, but by massive farms of computers ("bots") that are programmed to trade on behalf of large financial institutions. The algorithms likely scan news media and react accordingly. Most of what I'm seeing in my news feed headlines is panicked trash, and that's what the bots are feeding on: garbage in, garbage out...

This is also likely contributing to it... so until someone comes in tomorrow and go "WTF are our bots doing OH NO!" we won't see it turn around.

 

[hockeythug]

My suspicion is that a lot of the trading is not done by humans, but by massive farms of computers ("bots") that are programmed to trade on behalf of large financial institutions. The algorithms likely scan news media and react accordingly. Most of what I'm seeing in my news feed headlines is panicked trash, and that's what the bots are feeding on: garbage in, garbage out...

Then you have the CNBC crew including a hedge fund manager (who is short) minutes after release spewing nonsense to retail investors.

 

[SteveG3]

OK. Can someone explain to me why the stocks dropped?

It can't be that everyone else is crazy or stupid. I know there are lots of super smart people in finance.

It's possible that there are malicious forces at work (oil companies et al.).

It's possible that all these biz people are trapped in certain ways of thinking. If target X [fancy biz speak] was not met then FAIL. Obtuseness, in other words. Lack of imagination.

But I'd like to know if there are intelligent, not crazy, not malicious reason for what seems to me inexplicable.

the stock was down after hours based on the letter being only modestly positive. Tesla tends to have exaggerated moves in either direction, and the recent sharp downward moves of other stocks Tesla has incorrectly been lumped in with by relentless attempts to label it a momentum stock made this downward move even sharper.

than we have the earnings call. if the letter of intent is essentially a done deal (and it sounds like it is), this was one of the biggest announcements Tesla has ever made. we got some bonus bits, such as ~ demand in North America steadily increasing.

the information is out... and we're in a little window where people are sort of like deer in the headlights... this could be over before 8:00 tonight, or it may take a night of people sleeping on it and analyst reports coming out, but this is very significant news, and I'd expect it to move the stock back over $200 very soon.

I say this with a share buying level of confidence... I'll not comment on options.

 

[dmckinstry]

I think he is planning to take the money and run to Mars.

Yep. A sure thing. Ha.
OTOH, is there any way stockholders can get him to promise won't sell any significant fraction of his stock until after it reaches and is stable above $500/share AND there are two successful manned round trip missions to Mars?

After all, he has said he wants to die on Mars. But none of us want it to happen on landing.

 

[dmunjal]

If the stock drop sticks (keep in mind this is just AH trading, anything can happen tomorrow during normal hours), I would blame it on over exuberance again, which is very similar to why the stock dropped in Q3 (combined with some other catalysts). I don't see it dropping much more than it already has because of the heavy support from the 200 day average. But the fact is, people outside of the analysts were shooting for .22 non-GAAP EPS... we didn't hit that. Contrast that with Q4 where people were expecting and pretty much got the EPS right on the nose (again not counting analysts). So if it stays down it would be because people got too excited again, and now they are paying the price.

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This is also likely contributing to it... so until someone comes in tomorrow and go "WTF are our bots doing OH NO!" we won't see it turn around.

You can't ignore the general market. Sometimes, it's sell everything that is tech related or momentum related or biotech related. Facebook had great earnings but still went down.

There's a general worry that liquidity will decline over time due to QE tapering. The same thing happened in 2001 and 2008. Some stocks survive and thrive despite this. TSLA has to prove it's not a Twitter or other momentum stock. The earnings call helps clear up some of it.

 

[SteveG3]

Panasonic coming online was to me by far the largest short and mid-term hurdle left for Tesla.

wasn't it funny how Elon decided to bury the Panasonic news in the call... no separate news release, no mention of it in the shareholder letter, just Elon for the right moment to subtly state it in answer to a question, and while he had JB sitting there with him waiting to come in on the call. I can't remember another earnings call with JB on the line.

 

[person]

My suspicion is that a lot of the trading is not done by humans, but by massive farms of computers ("bots") that are programmed to trade on behalf of large financial institutions. The algorithms likely scan news media and react accordingly. Most of what I'm seeing in my news feed headlines is panicked trash, and that's what the bots are feeding on: garbage in, garbage out...

Hockeythug:

Then you have the CNBC crew including a hedge fund manager (who is short) minutes after release spewing nonsense to retail investors.

OK, thank you. But why the 'panicked trash' in the news feed?

 

[AprilDelivery??]

Anybody think tesla will bounce back tommorow and Friday to over 200? Or will it go the other way?

 

[anticitizen13.7]

Hockeythug:

OK, thank you. But why the 'panicked trash' in the news feed?

I posted a partial explanation in another thread earlier:

One of the unintended consequences of news media being largely "free" is that many news outlets rely on getting as many pageviews as possible in order to generate ad revenue. There's consequently a perverse incentive to create clickbait with inflammatory or dishonest headlines. As a result I try to get my news from public media and nonprofit organizations, but I don't think the larger public realizes what is going on.

http://www.teslamotorsclub.com/show...-Sales-May-be-Cooling-Off?p=652286#post652286

There are also a lot of people who lost a lot of money attempting to short sell TSLA. It may also be the case that angry bigwigs are influencing friends in media to attempt to reverse TSLA's rise, but it would be difficult to prove.

In any case, I don't worry about these wild swings. As long as Tesla stays on track with its plans, the stock price will sort itself out in the long run.

 

[chickensevil]

Panasonic coming online was to me by far the largest short and mid-term hurdle left for Tesla.

wasn't it funny how Elon decided to bury the Panasonic news in the call... no separate news release, no mention of it in the shareholder letter, just Elon for the right moment to subtly state it in answer to a question, and while he had JB sitting there with him waiting to come in on the call. I can't remember another earnings call with JB on the line.

I think he has been present before, but at the very least is sure has been a while. You could hear him cross talking with JB on some things to make sure they were giving the right info and also ruffling through papers to check their data before giving answers. I liked it, made it seem like they were prepared for just about anything that could be asked without having "pre-fabricated, canned" responses

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You can't ignore the general market. Sometimes, it's sell everything that is tech related or momentum related or biotech related. Facebook had great earnings but still went down.

There's a general worry that liquidity will decline over time due to QE tapering. The same thing happened in 2001 and 2008. Some stocks survive and thrive despite this. TSLA has to prove it's not a Twitter or other momentum stock. The earnings call helps clear up some of it.

If that's the case, then holding would be a pretty safe bet at this point since they seem to be pretty capable of plowing forward. I wouldn't expect a 2001 and 2008 repeat to kill off Tesla, and they have a killer product that will certainly bring them back up to this level at some point in the future. So if you are worried about a crash like that, I would feel pretty safe in Tesla to ride out the storm.

Edit: to be clear, the actually already weathered one storm, given they were in some pain during the 2008 crisis, They were out of cash and had a lot of issues getting their product to work... At the very least they already have one solid product that will hedge them against further hiccups on the release of future products

 

[techmaven]

Anybody think tesla will bounce back tommorow and Friday to over 200? Or will it go the other way?

Always hard to tell with the current macro environment. If this was January, we would have had a big pop. We still might as investors realize that a lot of the bear theories being bandied about in various forums just turned out to be not true. Plenty of risks were clarified or nullified. Therefore, I think there is limited downside from here. However, the macro environment is the big question. I didn't get May 9 calls just because it was easy to have market down days and misunderstandings that leave little time for adjustment before expiration.

 

[The Blue Owl]

Anybody think tesla will bounce back tommorow and Friday to over 200? Or will it go the other way?

I, for one, think it will bounce back.

I don't see it go lower from here. All positives that were presumed true before the call have been confirmed, with additional clarity provided on the GF, gross margins improvements, continued investment for reckless growth, and North America demand increasing (for those who needed that.) I predict we'll still float on the NASDAQ ocean for the most part, but with a general tendency to go up because of the inherent buoyancy provided by the positives mentioned.

 

[MikeC]

Anybody think tesla will bounce back tommorow and Friday to over 200? Or will it go the other way?

I'm hoping. I think we'll need some analyst help here, but not sure that there were really any new numbers released today for them to plug into their models.

 

[AlMc]

I'm hoping. I think we'll need some analyst help here, but not sure that there were really any new numbers released today for them to plug into their models.

If the 'james twins' or DB comes out with bullish reports/price targets the stock will move. If I were a short, I would be covering asap. They have a day or so to take their profits. If they get greedy (like we longs sometimes.....me in particular!) they may fuel a nice pop.

 

[aznt1217]

If the 'james twins' or DB comes out with bullish reports/price targets the stock will move. If I were a short, I would be covering asap. They have a day or so to take their profits. If they get greedy (like we longs sometimes.....me in particular!) they may fuel a nice pop.

You mean the John twins? From BofA? They won't come out with a bullish report -- this I am almost certain of. DB will probably reaffirm PT with overweight. Something to the effect of much execution is required so that's the risk. For the long term holders (like myself) I see this as a gift to buy me some time on the tax table and for me to get more cash to invest more (currently I'm tapped out). For the short term people, this is a great opportunity to get things on clearance.

I agree though, at the end Jeff Evanson talked about the series of roadshows that are going to be happening very soon. This is where the real questions get asked and people get a real sense of where things are going in person and with more time. If you notice, the headlines VERY quickly changed. When the letter was released most publications were generating... miss... loss.. this and that. Now they are back to focusing on the potential.

Key takeaways for the call for me were this:
1. Model X is on track-- this is huge actually given that they are ramping/improving Model S
2. Next big software update is coming really soon
3. Letter of Intent with Panasonic -- the big fear last time was that Panasonic wasn't in the cards-- the fact that they have a project team already says something.
4. Clearer picture of Gigafactories -- PLURAL guys. When I say clearer, I mean it's something to the effect of a campus set up which is great. Suppliers will win and Tesla will win.
5. Finally, from the horses mouth the difference between deliveries, reservations, and production-- essentially beating down the SELL SIDE report of BMW shares from Barclays. Been stressing this all along
6. Gross Margin improvement even with the "charge" of titanium shielding (this was my biggest fear which is now removed)-- I though the panels would be extremely expensive but this didn't come to fruition. I'm really thankful for that.
7. Dramatic supercharger expansion
8. Home energy storage (the concept of the design of it was striking) and this is going to reaffirm Morgan Stanley's last earnings note. When Tesla gets this done, it will make all cars net negative in energy consumption and net positive to the grid-- making the Model S an even better financial proposition to owners via credits from the utilities companies.
9. Direct raw materials sourcing-- this was huge to me and I think to Elon as he mentioned they went straight to the source of raw materials for cell components-- the miners. No middlemen. What's more important aside from the quantitative factor of cutting out a middle cost is the qualitative factor where suppliers actually feel like a producer cares (this pays off in spades in efficiency and quality-- just ask Toyota) and the fact that the miners had ideas on how to improve cost and efficiency just through phone conversations shouldn't be overlooked.
10. Shutting down the line for 10 days in July-- Right after Q2 earnings. This is going to be huge. Last time they shut down the line was the big ramp up to 400 cars a week. Then they shut it down a few days again to get to 600/700 cars a week. That's essentially double the rate for each time. There's more man power now and better learning. If Tesla is doubling every time... well I don't even have to explain this.

 

[justthateasy]

Anybody think tesla will bounce back tommorow and Friday to over 200? Or will it go the other way?

I hope that TSLA bounces back to over 200 tomorrow but the reality is that it probably won't. Looking at the much larger picture and how things have been playing out with economic data, I think that there's a higher probability that TSLA sees a lot more downside. I think that there's a much higher chance of seeing TSLA trade between 100-150 than there is of TSLA recovering and staying above 200 for the next few months.

As much as I believe in Elon being able to accomplish his goals with Tesla Motors, TSLA is another story. The "damage" has all ready been done and as we know, market perception is highly irrational and it will probably continue selling off despite the fundamentals of Tesla being sound. It looks like the bears will be taking it for the next few months and it's probably best to lock in any profit here then come back in towards the end of summer.

 

[AlMc]

I hope that TSLA bounces back to over 200 tomorrow but the reality is that it probably won't. Looking at the much larger picture and how things have been playing out with economic data, I think that there's a higher probability that TSLA sees a lot more downside. I think that there's a much higher chance of seeing TSLA trade between 100-150 than there is of TSLA recovering and staying above 200 for the next few months.

As much as I believe in Elon being able to accomplish his goals with Tesla Motors, TSLA is another story. The "damage" has all ready been done and as we know, market perception is highly irrational and it will probably continue selling off despite the fundamentals of Tesla being sound. It looks like the bears will be taking it for the next few months and it's probably best to lock in any profit here then come back in towards the end of summer.

DAng........You are right more than wrong and I hope you are wrong this time. I took profits on about 1/3 of my shares at $247...Great...Then promptly put much of the profit into LEAPS (they are bleeding right now and need a transfusion vs a bandaid) I was hoping the patient would recover over the next 2-4 months........

 

[mershaw2001]

Anybody think tesla will bounce back tommorow and Friday to over 200? Or will it go the other way?

I think we open 5 dollars down and stay above 190 for the day. We don't have the sort of bad news to fuel a major sell off. The loss from 191 today to 187 was on momentum selling, and then I think we saw a dip to 184 as the X was delayed and that was verbalized by elon. GF took us back up to 187.5 and we couldn't get good buying back because no one wants to take the risk of buying.

Tomorrow, we open 5 dollars down, but people will be reluctant to sell off on good news. The majority of the news needs to be digested for a few hours before you go "oh they are doing better than expected.. 4 factories??". I think institutions return to save us at the low 190s. If **** hits the fan then 184 is the test point from a few weeks ago- that was where support emerged during capitulation and we bounced hard off that up to 194 again.

 

[TSLAopt]

DAng........You are right more than wrong and I hope you are wrong this time. I took profits on about 1/3 of my shares at $247...Great...Then promptly put much of the profit into LEAPS (they are bleeding right now and need a transfusion vs a bandaid) I was hoping the patient would recover over the next 2-4 months........

Dont worry, I believe there could be some short term pain but as this 2nd line goes on in July and word gets out that they're ramping up fast the stock will start creeping back up quickly....I would guess by the time we get to the 3rd quarter earnings call we'll be at new highs or close to it.

 

[justthateasy]

DAng........You are right more than wrong and I hope you are wrong this time. I took profits on about 1/3 of my shares at $247...Great...Then promptly put much of the profit into LEAPS (they are bleeding right now and need a transfusion vs a bandaid) I was hoping the patient would recover over the next 2-4 months........

Thanks but I sometimes don't believe even what I say and go against my own advice honestly. And when ever I do follow my own advice, I end up losing, just my luck. So I just want to put it out there.

I'm watching that Google hangout that DaveT hosted right now and there are a couple of points to mention. First, the point was made that there's nothing to really look forward to until Q3 earnings in November as Q2 guidance is "so-so" as Dave put it. Second, the gigafactory might be breaking ground soon and this is awesome news, however, will it be enough for TSLA to shake off the selling pressure?