Short-Term TSLA Price Movements - 2014

[kenliles]

Exactly! And that's when I would sell all my shares... I think we as investors, fans and supporters need to understand,that at this stage of its lifecycle Tesla absolutley has to "spend money as fas as they can without wasting it". If they were OK with producing a single luxury sedan model at 30k per year run rate, there would be no point in investing in them - or at least the stock price would really be completley unjustified.

Agreed and thanks vgrin
This is what Long term investors expect and want. If your trading though, keep in mind most all of this year will be similar. They are in a building mode and will spend all profit doing so. Market performance of TSLA will be a challenge until momentum event catalysts start becoming more in view end of year to satisfy the shorter term buyers. Especially true given the momo category sell off. I'd be careful short term. hold stock and J16 for long positions for a ride through. My thoughts currently

 

[vgrinshpun]

Agreed and thanks vgrin
This is what Long term investors expect and want. If your trading though, keep in mind most all of this year will be similar. They are in a building mode and will spend all profit doing so. Market performance of TSLA will be a challenge until momentum event catalysts start becoming more in view end of year to satisfy the shorter term buyers. Especially true given the momo category sell off. I'd be careful short term. hold stock and J16 for long positions for a ride through. My thoughts currently

I also think now that TSLA might have hard time moving up substantially short and medium term (may be for 2 quarters). With all the baseless negative talk about the demand I do not think that the market as a whole is ready to accept that by the end of this year one of the lines would be maxed out sending MS at a yearly rate of 50,000 + to three continents, that in 2016 this production rate will be doubled with MX, all the while the GF will be being built full steam...

This reminds me of the steady progress TM was doing prior to Q1 2013, but market as a whole just did not believe/comprehend what's around the corner... The epiphany arrived post Q1, and the stock took off.

 

[Jack6591]

I also think now that TSLA might have hard time moving up substantially short and medium term (may be for 2 quarters). With all the baseless negative talk about the demand I do not think that the market as a whole is ready to accept that by the end of this year one of the lines would be maxed out sending MS at a yearly rate of 50,000 + to three continents, that in 2016 this production rate will be doubled with MX, all the while the GF will be being built full steam...

This reminds me of the steady progress TM was doing prior to Q1 2013, but market as a whole just did not believe/comprehend what's around the corner... The epiphany arrived post Q1, and the stock took off.

The Model X will bridge to Gen III.

Gigafactory developments will drive the stock in the interim.

 

[kenliles]

I also think now that TSLA might have hard time moving up substantially short and medium term (may be for 2 quarters). With all the baseless negative talk about the demand I do not think that the market as a whole is ready to accept that by the end of this year one of the lines would be maxed out sending MS at a yearly rate of 50,000 + to three continents, that in 2016 this production rate will be doubled with MX, all the while the GF will be being built full steam...

This reminds me of the steady progress TM was doing prior to Q1 2013, but market as a whole just did not believe/comprehend what's around the corner... The epiphany arrived post Q1, and the stock took off.

Fully agree. Almost identical setup and will produce some great long term opportunities. In fact, much of the FUD market will creat similar interpretations as last time, namely 'the spending is a high risk chase of a limited market' - they'll actually short the trade on the spending profile because fundamentally they don't believe the market will be created. This will be exaggerated with any negative news, ModX delay etc.
The Setup
Tesla 2014 spending massively on Production, Tooling, R&D, hiring, GF, SC, Stores
The Short Hook
Shipping all we can, battery limits, flattening market demand, no profit
The Sting
2015 2 full lines running, ModS/X full tilt (with batteries), AWD, SC done, GF half done, GENIII reveal, China-China-China
Shorts leave the building again, screaming.....- they've got my money in there!
"You have to keep this con even after you take his money. He can't know you took him." ... For the next time

 

[GravityPull]

The Model X will bridge to Gen III.

Gigafactory developments will drive the stock in the interim.

That is the plan. Part of what makes my bets conservative is the fact that the GenIII could be delayed more than the Model X.

What if the GenIII isn't ready until 2020? Will the other two $100k cars be in strong enough demand to sustain the strong growth the stock price expects?

 

[EnergyMax]

That is the plan. Part of what makes my bets conservative is the fact that the GenIII could be delayed more than the Model X.

What if the GenIII isn't ready until 2020? Will the other two $100k cars be in strong enough demand to sustain the strong growth the stock price expects?

The contingency plan would be to sell the Model S with cheaper gigafactory batteries, thus dropping the price and increasing volumes. They would update the design of the S and increase production efficiencies.

 

[mitch672]

That is the plan. Part of what makes my bets conservative is the fact that the GenIII could be delayed more than the Model X.

What if the GenIII isn't ready until 2020? Will the other two $100k cars be in strong enough demand to sustain the strong growth the stock price expects?

GenIII cannot be delayed until 2020, that would be disaster for Tesla. There are notes that come due in 2017 and 2019 for the $2 Billion Tesla just financed, so the Model S and X have to be selling well until late 2016, and the GenIII will need to be in massive demand via a reservation system that's likely to be setup in 2015 or so (guesstimate), so that Tesla can meet their financial obligations. That's why the gigafactory MUST be online to start production in 2017, that's was the point of borrowing the $2B was. If you think the GenIII will be delayed, you probably shouldn't be investing in TSLA (on the long side).

 

[Auzie]

That is the plan. Part of what makes my bets conservative is the fact that the GenIII could be delayed more than the Model X.
What if the GenIII isn't ready until 2020? Will the other two $100k cars be in strong enough demand to sustain the strong growth the stock price expects?

I would be surprised if the work on GenIII design is not already underway. Tesla engineers have favourable time frame and experience with 3 models preceding GenIII to get it right.

 

[32no]

That is the plan. Part of what makes my bets conservative is the fact that the GenIII could be delayed more than the Model X.

What if the GenIII isn't ready until 2020? Will the other two $100k cars be in strong enough demand to sustain the strong growth the stock price expects?

Elon has repeated 2016 as the year that gen 3 will come online and has said that the timeline has not yet been affected. Most Tesla investors expect Gen 3 in 2017. It is highly unlikely that it will be delayed any later than that, and the chances are low enough to not be factored in trading.

Edit: Elon said to expect Gen 3 in 3-4 years in 2013, and he has repeated 3 years in 2014. Looks as if 2017 is the current estimate, not 2016.

 

[30seconds]

GenIII cannot be delayed until 2020, that would be disaster for Tesla. There are notes that come due in 2017 and 2019 for the $2 Billion Tesla just financed, so the Model S and X have to be selling well until late 2016, and the GenIII will need to be in massive demand via a reservation system that's likely to be setup in 2015 or so (guesstimate), so that Tesla can meet their financial obligations. That's why the gigafactory MUST be online to start production in 2017, that's was the point of borrowing the $2B was. If you think the GenIII will be delayed, you probably shouldn't be investing in TSLA (on the long side).

A delay of this magnitude would be bad for tesla, however refinancing $2B in debt with revenues of 3-5x this amount and 25% margins will not be hard at all.

 

[mitch672]

A delay of this magnitude would be bad for tesla, however refinancing $2B in debt with revenues of 3-5x this amount and 25% margins will not be hard at all.

While it's possible to refinance, that's not the plan. The note holders have the option to convert to Tesla stock, which would be the preferred path, this makes some assumptions on the stock price at the time the notes are due, it needs to be fairly high, from what I seem to remember.. The way to accomplish that is to meet deadlines, and not refinance debt because they are delayed. From how JB and a Elon spoke on the conference call, they plan to deliver the Gen3 on time, that IS the stated mission of a Tesla Motors.
They've also stated multiple times that no new technology needs to be invented or created to build the Gen3, only the cost of the batteries needs to come down %30, the gigafactory, and time marching on should accomplish this.

 

[AlMc]

While it's possible to refinance, that's not the plan. The note holders have the option to convert to Tesla stock, which would be the preferred path, this makes some assumptions on the stock price at the time the notes are due, it needs to be fairly high, from what I seem to remember.. The way to accomplish that is to meet deadlines, and not refinance debt because they are delayed. From how JB and a Elon spoke on the conference call, they plan to deliver the Gen3 on time, that IS the stated mission of a Tesla Motors.
They've also stated multiple times that no new technology needs to be invented or created to build the Gen3, only the cost of the batteries needs to come down %30, the gigafactory, and time marching on should accomplish this.

If I remember correctly (and I have an 'old' brain) it is TMs option to either issue stock or pay off the bonds when they come due.

 

[mitch672]

If I remember correctly (and I have an 'old' brain) it is TMs option to either issue stock or pay off the bonds when they come due.

Correct. It's Teslas option to either pay cash or convert to stock. I seem to remember they hedged the transaction, to minimize dilution if tesla offers the note holders stock. They'd probably prefer to issue stock, assuming the price meets whats specified in the notes.. Keep the cash for advertising and continued global expansion.

 

[mrdoubleb]

That is the plan. Part of what makes my bets conservative is the fact that the GenIII could be delayed more than the Model X.

What if the GenIII isn't ready until 2020? Will the other two $100k cars be in strong enough demand to sustain the strong growth the stock price expects?

I do not want to downplay the difficulties of designing a brand new car, espcially since my engineering skills have only been trained by NGC TV... but consider this:

- The Tesla drivetrain is beautifully simple. It is truly drive by wire, there is about 7000 less parts than for an ICE, you have a smallish and relativley dumb electric motor/1 gear transmission/inverter combo they have years of expereince with. If Gen3 wasn an ICE and the company had only built a big luxury sedan with a V12 engine before, they'd have to develop a brand new V4 or V6 for the small car. Tesla could just 1:1 use the S "engine" - although they may tweak it a bit, as they don't need that much HP for smaller/lighter car and want to optimize power draw for the smaller battery pack. (But for all I know that tweaking may only be SW not HW).

- The mechanics will be simple. Gen3 wants to be "cheap" so there will be no falcon wing doors, AWD or other such specialty items. I bet these 2 were the biggest reasons for X delays

- To me the only real risk for Gen3 is batteries, any GF delays. If that reamins oin track, I am fully confident Tesla engineers can deliver the rest of the car in 3,5 years, by Q4 2017.

 

[FANGO]

Elon has repeated 2016 as the year that gen 3 will come online .

This is most certainly not correct. A public date for release of Gen 3 has never been given and if it had, it wouldn't be 2016. Personally I'm not even expecting it until 2018, though I would be happy to see 2017.

 

[anticitizen13.7]

This is most certainly not correct. A public date for release of Gen 3 has never been given and if it had, it wouldn't be 2016. Personally I'm not even expecting it until 2018, though I would be happy to see 2017.

For a long time, 2018 has been my guess for the G3 Tesla, because Tesla has to not only design the car, but also build the Gigafactory to supply the vast number of LiIon cells needed for the battery packs.

Now that the Model X design is finished, I think more engineering resources can be brought to support G3 efforts. However, Model X may still require a lot of engineering effort, as the company has to translate its design into a manufactured product. I'm sure that the product engineers have to provide a lot of support and input to the folks who are creating the production lines this year.

If Model X has a good launch in early 2015, it's full steam ahead on the G3 model. There are just so many moving parts to the whole business that any prediction now is fuzzy.

 

[blakegallagher]

I also think now that TSLA might have hard time moving up substantially short and medium term (may be for 2 quarters). With all the baseless negative talk about the demand I do not think that the market as a whole is ready to accept that by the end of this year one of the lines would be maxed out sending MS at a yearly rate of 50,000 + to three continents, that in 2016 this production rate will be doubled with MX, all the while the GF will be being built full steam...

This reminds me of the steady progress TM was doing prior to Q1 2013, but market as a whole just did not believe/comprehend what's around the corner... The epiphany arrived post Q1, and the stock took off.

I agree Vgrinshpun although I think it could possibly recover much quicker than that. I think big Funds like Contrafund (and the many much smaller funds) that were with us in Q1 2013 will see this as such and add where they can. With the fundamentals so strong and such good catalyst ahead (new line coming on in July and Gigafactory breaking ground next month) I think smart funds will be adding this quarter and next.

That being said I would not advise anyone to bet on the short term here unless they were a gambler. Leaps is always the safest of the options plays. The few retail investors I advise on Tsla are getting a recommendation to add shares or Leaps depending on their risk profile.

 

[Cattledog]

For a long time, 2018 has been my guess for the G3 Tesla, because Tesla has to not only design the car, but also build the Gigafactory to supply the vast number of LiIon cells needed for the battery packs.

Now that the Model X design is finished, I think more engineering resources can be brought to support G3 efforts. However, Model X may still require a lot of engineering effort, as the company has to translate its design into a manufactured product. I'm sure that the product engineers have to provide a lot of support and input to the folks who are creating the production lines this year.

If Model X has a good launch in early 2015, it's full steam ahead on the G3 model. There are just so many moving parts to the whole business that any prediction now is fuzzy.

I'd also like to think that the Gen 3X will come online in a parallel track. I would assume gigafactory's ability to deliver battery packs at a >30% discount is easier at 500k packs vs 250k. Why not from the getgo?

 

[vgrinshpun]

I agree Vgrinshpun although I think it could possibly recover much quicker than that. I think big Funds like Contrafund (and the many much smaller funds) that were with us in Q1 2013 will see this as such and add where they can. With the fundamentals so strong and such good catalyst ahead (new line coming on in July and Gigafactory breaking ground next month) I think smart funds will be adding this quarter and next.

That being said I would not advise anyone to bet on the short term here unless they were a gambler. Leaps is always the safest of the options plays. The few retail investors I advise on Tsla are getting a recommendation to add shares or Leaps depending on their risk profile.

I hope for a quicker recovery too, but am not counting on it.

 

[chickensevil]

So. What I've learned from this thread is that it's offensive to suggest trading strategies for the short term.

While I am not one of the stronger voices on this forum (I come and go) I am almost positive I posted after the Q4 earnings that Q1 at that point was likely to be a bust simply because they advertised how many cars they were going to produce and stated that deliveries would be significantly lower than that. Also would be lower because they were projecting to come in under their previous quarter in deliveries that would also be viewed as a negative. I don't recall anyone getting upset with me for voicing my thoughts on the subject and many people here play both sides.

it isn't what you say, so much as how you say it. Assuming of course you are not restating things that have been debunked numerous times already... Then you are very likely to get yelled at, simply because to many people you would be pointlessly trashing the stock.

for the record, I do not see the stock going anywhere spectacular... At least not up... Any time in the immediate future... With their outlook on Q2 and Q3, unless we get some damn good news, it will likely chase the 200 moving average. Just my thoughts on the subject. And I think at this point it will take something serious in the bad news department to cause the stock to fall below the 200 day. So, I would recommend either a hold or a weak buy... Just my two cents.

it is a pretty great price to buy in or add to a position though