Short-Term TSLA Price Movements - 2015

[Curt Renz]

I am joining the short term doom and gloom club. I just sold some Jan/16 calls I bought when the stock was in the 180's. So I did well with those (although should of sold pre earnings and would of done 25% better or more). Anyhow I really think the next quarterly meeting will be bad , strictly do to a delay in model X. So I wanted some cash around to buy when that happens. I think traders who want the stock cheap will pile in driving the stock down , knowing that in 6 months times, a delay in model x really means nothing. I see the stock declining even if they hit 50 000 deliveries this year. On the flip side is if the model X gets the best press ever, or if there is a 'surprise' built in which electrifies the press this could be a bad move. Even if the model x is amazing I do not see the market picking up on it for a few weeks post launch when some magazines and reporters actually get a chance to drive it, which i feel will be way after Q3. I do not feel the 'configuration screen of the X appearing will bump the stock significantly, like a lot of people here do.

I hope you still own actual shares of Tesla stock. After this week's follow-on public offering, I expect the participating banks and their institutional clients to support the share price for a while.

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I think it's fairly likely we will see the $180-$200 levels some time before Q1 earnings which I agree will be a positive catalyst. What I'm thinking is that it didn't really take much for the stock to hit $180 5 months ago, no major revisions, or any at all as I remember it of their guidance. Now we are looking at a lowered yearly guidance that might even not be met if there's problems with the X ramp, and more importantly a lowered guidance for next year. Last we heard was a 2k/week runrate at years end with a question mark regarding further growth in 2016, now its 1700/week for next year and no talk about further capacity upgrades.

Furthermore I am pretty sceptical about whether this 1700 weekly demand will even be reached this year. S demand is around a thousand a week and I doubt the X expands demand by 70%, I mean how different will the X really be from the S? Sure it will have some nice doors and an elevated seating, but the driving experience will be the same or slightly worse, all the other cool Tesla features will probably be the same, it will just be a slightly larger S, I don't think demand will increase more than 30-40% at most which will push the total demand to around 70k/year or 13-1400/week, will this be enough for wall street who was promised 2k/week? I'm not so sure. Obviously Tesla will still be able to produce and sell 1700/week due to the pent up X demand but it will be with a shrinking back log.

Just for the record I am still bullish long term and think demand will increase steadily for a long time, I just think Wall street might be dissapointed with the end of year demand should it be only 2/3rds of what was guided for not long ago.

I'd expect demand to jump significantly, if waiting times are greatly reduced due to increased production. Car buyers are used to going to their local dealer and quickly driving a new car off the lot. Many who learn that they have to wait a while to take delivery on a Tesla car may have been turning to established brands instead. When the old clunker starts having problems, many car owners want to replace it right away.

 

[AlMc]

Not sure if this link has been posted....a positive response to the recent cap raise: http://finance.yahoo.com/video/why-investors-applauding-teslas-share-224601180.html

 

[jhm]

The stock offering underwriters have a 30 day option to buy additional shares. I suspect that the Model X unveiling will not happen until after that. I think we're looking at second half of September.

The opposite theory is that to optimize the proceeds, Tesla unveils the Model X while the underwriters are selling shares. So we could be surprised by an earier than expected unveiling.

So which conjecture is correct?

 

[tinm]

Pardon a dumb question: has the new stock offering actually gone through? Have the additional shares been sold? If not, when?

 

[MitchJi]

Once the firm reaches sales of 100,000 cars or so, it will be able to self finance its growth. 100,000 cars at net profit of $10,000 per car amounts to about $1 billion profit per time.

I think $10k per car is too low now and whatever the correct price is now you need to add about $6-10k when the GF price reductions happen, probably in the first half of 2017.

My eye is more sharply focused on Feb/March of next year. That is when excitement will start building for impressive X delivery results, and a very profitable quarter, because it will be designed to be profitable. So the April 6 announcement of deliveries, and then mid May Q1 ER report. AROUND that time I expect a new push for ATH. Between now and then... hammock time, choppy time, dunno.

I think all we need to get a nice production ramp boost is a production level for a few weeks of 1500-2000 cars, and as soon as that happens it will be common knowledge because of the waiting list.

 

[doggusfluffy]

Betting on a Smooth Ride, Investors Flock to Tesla

“A lot of their valuation seems to be depending on all things working out,” he said. “If this was another company, I’d say those expectations are unrealistic. But that’s kind of the allure of Tesla. They shoot for the moon.”

 

[mmd]

Pardon a dumb question: has the new stock offering actually gone through? Have the additional shares been sold? If not, when?

Not yet. I think it will happen on Aug 19th.
"The underwriters expect to deliver the shares of common stock against payment in New York, New York on or about August 19, 2015."
http://www.sec.gov/Archives/edgar/data/1318605/000119312515290590/d84889d424b5.htm

 

[tinm]

Ah, thanks. Missed that when I scanned thru prospectus.

 

[mmd]

Many of the underwriters are actually bearish, and have much lower price targets than $242. Logically, it seems they wouldn't want to hold the shares too long if they think the price is going down. I don't know if this means they will be selling these slowly in the coming month, putting a slight downward pressure.

 

[Johan]

Many of the underwriters are actually bearish, and have much lower price targets than $242. Logically, it seems they wouldn't want to hold the shares too long if they think the price is going down. I don't know if this means they will be selling these slowly in the coming month, putting a slight downward pressure.

That's not how it works. When the analysis arm of a bank says one thing you'll mostly find that the investment arm of the bank does the opposite. They tell clients and consumers to sell while they themselves accumulate (at lower prices).

 

[mmd]

That's not how it works. When the analysis arm of a bank says one thing you'll mostly find that the investment arm of the bank does the opposite. They tell clients and consumers to sell while they themselves accumulate (at lower prices).

OK, thanks for the info!

 

[Johan]

OK, thanks for the info!

Please take with a grain of salt.

It was a bit cynical on my part. But I think there's quite some truth to it.

 

[mrdoubleb]

OK, thanks for the info!

Yeah, you know there is a Chinese Wall between these arms of the financial institutions. It's not like the analyst arm talks down a stock and then the investment arm swoops in and buys in at a lower share price. I mean that just would be wrong and possibly illegal. /s

 

[Johan]

Yeah, you know there is a Chinese Wall between these arms of the financial institutions. It's not like the analyst arm talks down a stock and then the investment arm swoops in and buys in at a lower share price. I mean that just would be wrong and possibly illegal. /s

Not to mention unethical. Would never happen in the financial industry.

 

[Blip]

Am I sensing a little nordic sarcasm?

 

[Drax7]

I think it's fairly likely we will see the $180-$200 levels some time before Q1 earnings which I agree will be a positive catalyst. What I'm thinking is that it didn't really take much for the stock to hit $180 5 months ago, no major revisions, or any at all as I remember it of their guidance. Now we are looking at a lowered yearly guidance that might even not be met if there's problems with the X ramp, and more importantly a lowered guidance for next year. Last we heard was a 2k/week runrate at years end with a question mark regarding further growth in 2016, now its 1700/week for next year and no talk about further capacity upgrades.

Furthermore I am pretty sceptical about whether this 1700 weekly demand will even be reached this year. S demand is around a thousand a week and I doubt the X expands demand by 70%, I mean how different will the X really be from the S? Sure it will have some nice doors and an elevated seating, but the driving experience will be the same or slightly worse, all the other cool Tesla features will probably be the same, it will just be a slightly larger S, I don't think demand will increase more than 30-40% at most which will push the total demand to around 70k/year or 13-1400/week, will this be enough for wall street who was promised 2k/week? I'm not so sure. Obviously Tesla will still be able to produce and sell 1700/week due to the pent up X demand but it will be with a shrinking back log.

Just for the record I am still bullish long term and think demand will increase steadily for a long time, I just think Wall street might be dissapointed with the end of year demand should it be only 2/3rds of what was guided for not long ago.

Lots of wishful thinking , bearish until you buy , then bullish. Intricate rationalizations to justify your actions. Very common among sold out Bulls.
Nonetheless I admire your conviction.

 

[sub]

Lots of wishful thinking , bearish until you buy , then bullish. Intricate rationalizations to justify your actions. Very common among sold out Bulls.

i was going to say the same thing. It's an interesting phenomenon. On the rare occasion I've been without any bullish positions in the last 2-3 years I immediately start seeing all the negative and convincing myself, almost hoping, that the stock price will drop to justify my lack of holding a position. Human nature though most won't admit to it!

 

[Drax7]

@ Sub, Been there a million times , it might work half the time, though ex ante no way of knowing.
and then I see Buffett hold a position for 50 years and become the most successful
ever.

Elon is the only nut ceo that buys his secondary stock offering, that's
pure cognitive dissonance in my head.

 

[Perfectlogic]

Lots of wishful thinking , bearish until you buy , then bullish. Intricate rationalizations to justify your actions. Very common among sold out Bulls.
Nonetheless I admire your conviction.

Why do you think that I am so convinced I'm right? What I wrote was that I think the explained scenario is "fairly likely" to come true, somewhere above 50% which is why I have chosen to invest my money elsewhere for the time being. I was not forced to sell and then turned bearish. The psychological principle you explain is probably more applicable to yourself as you discard my post by going after my person instead of responding to my arguments, you seem "permabullish", I was one once too.

I would like to know where you see wishful thinking in my post and why.

 

[hockeythug]

Does anybody see the shut down in the Fremont factory today having any significant impact, namely on vehicle production volume? My guess is no because the market did not seem to care

I doubt it. I think they can easily make up a day(if that) of production.