Short-Term TSLA Price Movements - 2014

[Larken]

There is one more point to be made (but I got tired of typing on my phone) that I have been thinking about a bit since after the ER, to come to an agreement with myself as to why I should still hold and hold and hold my shares. One of the most important reason I have come up with is maybe at first kind of counter intuitive but it's the fact that Elon and his crew do not really care about the stock price at all.

Why is this great you ask? Let me make an analogy: Think about professional sports. There are probably quite a few players who spend a lot of time thinking about how to look good on and off the field in order to get sponsor contracts. There are probably many players who think a lot about the bonuses they can get if they win a game or do good in a season and what to do with the money. And then you have the athletes who play the game to the fullest because they love it, who want nothing more than to win and to be the best - these guys practice the hardest, have to most focus and the most heart. Now guess who wins the most bonuses and get the biggest sponsor contracts? That's right, it's the one guy who doesn't really care about it. Elon and his team is that great athlete.

Another analogy: Let's say there's this dream girl, who all the guys want. She's beautiful as well as a really good person, she volunteers at a charity for children. A group of young guys all come to the charity. Some of them have put a lot of time in the their appearance, trying to win her over. Some are interacting with the children but are constantly looking over their shoulder to see if they get her attention and if they look good playing with the kids. But then there is this one guy who forgets about the girl and just gives his undivided attention to the children. Guess which of the guys catch her interest in the end?

OK I know kind of cheesy comparisons, but when you think about it there are so many companies out there who care too much about their stock price, their sales and the management care too much about their bonuses and options. With Tesla it's all technology, products, satisfied customers, growth and then more growth. It's not about protecting their lead against the competition but about extending it. It's not about playing it safe but they go all in, all the time. It's not about following others but about leading the way and doing things in a new way, the right way. The stock price just comes naturally. That's why I love it every time Elon says he doesn't care about the stock price, or that the high stock price is distracting.

Well said, you are absolutely right and this is a big part of why I never sell my shares. The world is ready for a company that does things the right way and Tesla and it's shareholders will be handsomely rewarded for that.Tesla is showing everone that it is possible to run a company that is taking responsibility for humanity and the environment. At the same time it's portraying the rest of the automotive industry as incompetent crooks (think China pricing) who care only about lining their pockets and selling inferior products that need service and dependence on the oil industry. The tidal wave of success for Tesla will come and it will be huge.

 

[FANGO]

It's perhaps worth noting that Tesla really doesn't intend to make profit for a very, very long time beyond what's necessary to stay afloat. Elon's goal is to accelerate EV adoption, not make money. Consequently, they'll be shoving every revenue penny back into Tesla for a long time.

Tesla guided to barely being cash flow neutral for the year in the ER as they spend for the X and the Gigafactory. But they could basically say they intend to stay relatively cash flow neutral for the next, what, 5 years?

If a company intends it grow quickly, profit is the last thing it wants to make. Holding cash is a waste of money. You reinvest it all until the company is big enough to skate and start providing dividends to shareholders. This is not possible while pursuing a near-doubling in size for 5 years straight.

 

[Auzie]

1. I said those with huge gains and holding will be fuel for future downturns.

2. If it makes you feel better, i'll say I got burned short and long tesla. that's why i live in a cave... duh...

1. That is directed towards folks who made some nice gains against the odds. I'd like to think that beating the long odds is some sort of testament of one's cognitive abilities. I personally would never try to tell someone like captain Sully that there is a great risk to what he is doing and he needs to re-asses his risk.

2. Not sure if that was sarcasm. If it is not and you got burned, I am sorry for your losses. When I consistently lose, I question my logic and behavior and make changes to both, then reiterate some more, until I am happy with the outcome.

The last but not the least, I recommend going to a beach, it is much better place than a cave. Much more light.:smile:

 

[Papafox]

I salute the knife catchers, who can now claim to have bought TSLA at below 180 during the Post-Q1ER dip. May you all make enough profits to soon be cruising the highways in the Tesla vehicle of your choice and heading towards early retirement. We still may be in for a surprise, but so far your gamble looks like an intelligent one.

 

[The Blue Owl]

The last but not the least, I recommend going to a beach, it is much better place than a cave. Much more light.:smile:

That's easy for you to say. Where you go to the beach, it's all sunny and Baywatchy. Where I go, it's polar bears.

 

[SteveG3]

I think those that hold with significant gains in a stock like TSLA is greedy, trying to time the absolute top, and loss averse.

Who am i to tell anyone to go long or short? Just expressing my thoughts. There are times to follow your heart, there are times to follow the brain/numbers. I just think longer term, price follow cold hard numbers, not potential/dream. Just my thoughts

bryson, we can both be reasonable about this. I'm not interested in trying to frame you as spooked by irrational fears, while I am using my head. I give you the benefit of the doubt that you are using your head, when you say you are. I'd ask that you please do the same for me as well. a back and forth of trying to frame the other person as irrational, whether as a dreamer or spooked by imaginary fears does not do anyone any good. fwiw, I've modeled eps in 2017, 2020, and 2025, and it is based on those numbers (mostly 2020) that I arrive at my estimate of fair valuation of the stock.

 

[GravityPull]

As for Model X, I think some people are missing the fact that if it slips, they'll just make more Model S's. With roughly the same ASP's and likely ongoing demand, it is not the case that slippage of the Model X ship date means less sales for Tesla. If they don't make a Model X vehicle earlier, they'll make a Model S instead. Therefore, discounting the stock based on either delivery scheduling issues or Model X slippage is nuts.

Hi Techmaven
it has been my personal experience in visiting three of the Tesla Sales Showrooms in the SF Bay Area many times in recent months that the employees have experienced a slow down in sales and don't expect their sales to pick up much until the Model X is ready. To me that is an indication that if they want to maintain the rapid growth necessary to keep the stock price at these levels any additional Model X delays will eventually cause the stock to plummet. As I recall it was originally expected to be ready in late 2013, then late 2014, and now I think they're saying 2nd qtr 2015.

 

[CatB]

@GravityPull - I wouldn't be surprised if the SF Bay area were already saturated with MS. That is not the case elsewhere though, so I still believe Elon when he says NA demand is not a problem. I'm seeing more MS's on the road in DC, but Baltimore is a different story. I spoke to 3 people today who'd only heard about the MS and had never seen one.

 

[techmaven]

Hi Techmaven
it has been my personal experience in visiting three of the Tesla Sales Showrooms in the SF Bay Area many times in recent months that the employees have experienced a slow down in sales and don't expect their sales to pick up much until the Model X is ready. To me that is an indication that if they want to maintain the rapid growth necessary to keep the stock price at these levels any additional Model X delays will eventually cause the stock to plummet. As I recall it was originally expected to be ready in late 2013, then late 2014, and now I think they're saying 2nd qtr 2015.

That is an interesting factoid. The issue, however, is that global demand still seems quite strong. California is probably not a good barometer because of the high level of buying there already. Also, people are more comfortable now ordering online and not going through an nearly an extensive sales process in person - there is now so much more information online and with existing owners. I had a discussion exactly on this point with the manager of the Montgomery Mall store - she was saying that there seems more people directly buying online and need less hand holding from the stores. As Tesla pushes Superchargers to enable distance travel in major metro areas that have been left out like Atlanta and Boston or the entirety of Canada, North American demand will pick up. You have to look at the end of 2014 map and see that the sales levels in many major metro areas have barely scratched potential early demand. Just go and pull the largest media markets list and see how many cities have Supercharger coverage. Further, Tesla is still expanding into new markets and we don't see a slack in fulfilling that demand through Model X launch.

 

[green1]

People who have never had a chance to interact with a Tesla in person go to a showroom, in an area with tons of Teslas they talk to their friend who already has one and then order online. Remember, these aren't dealers, you don't HAVE to go to one to buy the car! Personally I plan to get to a Tesla gallery as soon as I can, but that's because I'm in an area that has very few cars, and no stores, if I lived in California I'd probably just go to the nearest mall and talk to the first owner that drives up.

I'll also take Musk's word that NA demand is increasing over a second hand anecdote on a forum that one specific store is seeing a decrease.

 

[Cwin]

So, has anyone noticed that we've had an unusually low volume during this ER as compared to others?

I don't know what to make of it. What do you guys think?

 

[The Blue Owl]

So, has anyone noticed that we've had an unusually low volume during this ER as compared to others?

I don't know what to make of it. What do you guys think?

I did notice that yesterday, and I was wondering the same thing.

To me it shows there is no real sense of panic brewing. I think it was an artificial drop, driven by the NASDAQ, wrong expectations, and alarmist headlines linking TSLA with the momos and the "risk off" trend.

 

[Cwin]

I did notice that yesterday, and I was wondering the same thing.

To me it shows there is no real sense of panic brewing. I think it was an artificial drop, driven by the NASDAQ, wrong expectations, and alarmist headlines linking TSLA with the momos and the "risk off" trend.

I was thinking the same. A lot of people holding their stock and not trading at all.

But are there enough retail longs that this would have a noticeable effect?

 

[SteveG3]

fwiw, Paulo Santos over at Seeking Alpha, had put out an article after Wednesday's call suggesting that North American sales being up sequentially 10% was due to Model X reservations as Tesla had not specifically said Model S sales in North America up 10%. Paulo went on to continue claiming North American Model S sales have peaked. I called IR this evening, actually spoke with Jeff Evanson, and he said unequivocally Model S sales were up 10% in North America. He was also aware that the company had not stated this as clearly as they could have.

 

[anticitizen13.7]

I saw this earlier and I have to address this.

Talking about market/bot/media cheating you is not helpful. IF the market is rigged, then you willingly participating in a scam (with you being the victim) makes you a fool? Personal financial responsibility is a lost trait in our society.

First of all, it is absolutely critical that people (1) know that the market is rigged via bots and high frequency trading and (2) talk about it. This is the ONLY way people are going to know how to get around this rigging -- by not playing the short term game. You can win if you play asymmetrically. You cannot typically win against someone who has direct fiber to a stock exchange and a ton of computational firepower behind that connection. Bots and HFT systems are designed to make lots of money quickly. They aren't designed to figure out (at least as far as I can determine) which companies have game-changing products and services.

Going forward, $200 becomes the new resistance (buyers WILL sell to break even if TSLA approaches $200 again). The next wave of victims are those that bought from $140-170 around Jan 2014. Like I said before, the morale will not improve until the knife catching stops.

"Knife catching" only happens to people who buy and then panic and sell when what they bought falls in value, rather than waiting for a company's plans to unfold. Investors should NOT worry about buying at the low price, because odds are they won't be able to foresee or get that low price. If investors believe in Tesla's long-term plan and believe that TSLA will reach $1,000+, it makes little difference to most people whether one buys at $180 or $170. I believe that attempting to get a "perfect" return by timing is an obstacle to capturing a "great" return, or most of a price delta.

For those of you that feel smug about buying early, have 900% gains, and holding... you are the fuel that will keep the red candles burning.

Hubris: this community is a gigafactory of hubris. When short term trades suffer, they become long term investments. That's an amature move.

good luck all.

The amateur move is not having an exit strategy. The time to start exiting is when the G3 Tesla is selling like the iPhone 4S did in 2011 through 2012. That is to say, everyone and their dog wants one, the market cap is in the hundreds of billions, and "analysts" on cable news scream that TSLA is hotter and safer than gold.

Short term stuff is like quantum mechanics. It's chaos and probabilities. Play Einstein's game at the quantum level and you will lose. Play the game you can win.

 

[Auzie]

I salute the knife catchers, who can now claim to have bought TSLA at below 180 during the Post-Q1ER dip. May you all make enough profits to soon be cruising the highways in the Tesla vehicle of your choice and heading towards early retirement. We still may be in for a surprise, but so far your gamble looks like an intelligent one.

I gratefully receive your salute. My order got executed while I was dreaming of driving indigo blue Tesla across the ocean.

 

[Auzie]

@GravityPull - I wouldn't be surprised if the SF Bay area were already saturated with MS. That is not the case elsewhere though, so I still believe Elon when he says NA demand is not a problem. I'm seeing more MS's on the road in DC, but Baltimore is a different story. I spoke to 3 people today who'd only heard about the MS and had never seen one.

For me the potential demand is the least relevant risk factor. My evaluation of that risk relies more on the car quality, and its edge over ice cars, rather than on anyone's statements related to the current demand, including Elon's. I do not think that Tesla will have demand problems any time soon.

I see the biggest risk in being able to grow fast, to build new manufacturing facilities around the world. That requires very different skill sets, and Tesla team may need to bring these skills onboard. It seems to me that what the team has done so far was much harder than what lies ahead.

 

[NuclearPowered]

The amateur move is not having an exit strategy. The time to start exiting is when the G3 Tesla is selling like the iPhone 4S did in 2011 through 2012. That is to say, everyone and their dog wants one, the market cap is in the hundreds of billions, and "analysts" on cable news scream that TSLA is hotter and safer than gold.

+1 great post. This should be everyone's exit strategy.

 

[MartinAustin]

I think it was great for TSLA to go into the weekend with a 2% increase, clawing back 20% of Thursday's losses. The weekend is really when people will be able to take into consideration more examinations of the earnings report, and check around for analysis and more perspective. I believe TSLA will do well next week, as long as there isn't more Ukraine/Russia shenanigans.

Yes, I was totally wrong about the effect of the ER on the stock, if you check my comments from Wednesday afternoon I forgot one of the classic tenets of the stock market - buy on the rumour, sell on the news - and that's exactly what happened.

Unless Tesla announces something totally unexpected, and takes us all by surprise in a big way (for example, Elon reports that a new hardware upgrade for all cars will allow them to fly) - the stock will no longer jump 30% after the ER like it did one year ago.

If Tesla simply sticks to the steep trajectory it's currently on, which is awesome in 697 ways - the stock will fall after each report that simply confirms that the progress is under way per the announced plan. That's what happened Wednesday.

The bottom line is that TSLA is still a volatile stock. We see jumps of 5% and 8% some times, and falls of 5% other days. This week we saw a drop of 7% and then 10% if I recall the numbers correctly. That's super-volatile... but it's still way higher than just a few months ago. I bought half my current holdings at $117 at the end of the fire sale. TSLA then went on to more-than-double to $265. If TSLA doubles from $185, that would be $370.

As a few folks pointed out in earlier posts, Tesla has done nothing less than plough all possible profits into future growth of the company - setting up battery production/recycling factories and expanding the Supercharger network all over the planet. Both are a good idea if you're serious about producing 500,000 cars per year just 6 years from now. What's to say Tesla won't achieve the market cap of Toyota by that point? Tesla are going to be SO FAR AHEAD of the other manufacturers it's silly. Ask yourself:

What other electric car manufacturer is talking directly to mining companies?
What other electric car manufacturer is building enough manufacturing capacity to be the #1 battery producer in the world? (and that's just GFactory #1)
What other electric car manufacturer is being wooed by the Chinese Government?

By 2017 when most everyone knows about Tesla, and how cheap electric cars really are to run, and demand for the Gen3 is going through the roof (believe me I think among customers and media, the pre-ordering/reservation stage is going to be the same level of frenzy as Apple's biggest product launches)... that's when TSLA will be $1390 based on even bigger future production, and gasoline will be falling in price in order to keep people buying those cars. Sorry for going all long-term... but the volatility of TSLA (seen yesterday) has to be seen in the light of the inexorable march that it's on.

 

[Curt Renz]

Fellow regulars here may have noticed that short selling trolls are only seen at TMC when the stock is near the bottom of a selloff. Their greatest enemies are strong long term TSLA shareholders. Those of us who keep holding our shares make it hard for the shorts to keep forcing the price down. More so than with most companies, a large number of TSLA shareholders are in for the long haul, and quite a few are satisfied Model S owners.

The shorts should have covered at the lows, but some of them remain greedy for more. So they come to this message board populated with shareholders, and attempt to spread FUD. They call the strong longs "amateurs" and pretend to wonder why we wait so long to sell. They mock us for possibly saving shares for our heirs. They’ll do anything to shake us out of the TSLA tree. If they fail in their attempts, then their hopes for greater short term profits are doomed.

Some here say that perhaps they deserve our attention. Not when so many of their arguments are flawed. They may have been received with respect, if their statements were not interspersed with nonsense like the future prospects of a company should not be given much consideration. When the propaganda smells like FUD, ignore it. Remain confident in your own evaluation of the company and its management.