Short-Term TSLA Price Movements - 2015

[stealthology]

Agree. The much larger issue is how many S+X are delivered. The mix matters, but MUCH less. any X>0 will do for most market reaction scenarios. Everyone knows the volume is in 2016, so as long as the story is "The X is ramping" the number doesn't matter much. As Elon said, with an exponential curve a little bit of shift in the X axis really affects the area under the curve (paraphrasing). I think people understand this. The other thing the market will care about, that we don't even talk about any more is EPS. If the capex spending is down, it will quiet the "cash burn" narrative which is keeping a lid on the stock price.

Thank you for your thoughts. Didn't Tesla basically tell Credit Suisse earlier this month that its "gross margins are disappointing and below what the company thinks they can be" (link)? Tesla did sandwich that bit of info right after re-stating that they expect to reach several hundred X's/week sometime in Dec, that they "should hit their 17K delivery forecast for Q4", and that they expect the S to reach top market-share position in Europe for the first time in its price segment.

Was Tesla potentially getting us ready for a lower EPS for Q4? I'm sure that costs in Q4 were pretty decent to get ready for the X. From the last Q3 call, Elon said cash-flow positive is their aspiration in Q1-- which is probably when they'll have less CapEx for sure and much more sales with the X ramp-up. Anyone have thoughts on this?

 

[Curt Renz]

So the SP manipulators pay less for their SP manipulation by buying/selling stock till max pain price is hit, compared the money they save on the options market?

Yes, that's their hope. One day of manipulative stock selling can more than match what retail traders have spent on options during the quarter. Often nudges by hedge fund manipulators to push a stock downward can result in a cascade of stop loss limits being hit by weak longs and day traders, thus enhancing the manipulators' efforts. But the manipulators would implement such a plan only in circumstances in which they have determined that profit is likely. Afterward they would likely buy back the shares they sold in the manipulation as soon as possible. It's not an exact science, but the hedge funds play the odds when they appear to be in their favor.

 

[doctoxics]

Thank you for your thoughts. Didn't Tesla basically tell Credit Suisse earlier this month that its "gross margins are disappointing and below what the company thinks they can be" (link)? Tesla did sandwich that bit of info right after re-stating that they expect to reach several hundred X's/week sometime in Dec, that they "should hit their 17K delivery forecast for Q4", and that they expect the S to reach top market-share position in Europe for the first time in its price segment.

Was Tesla potentially getting us ready for a lower EPS for Q4? I'm sure that costs in Q4 were pretty decent to get ready for the X. From the last Q3 call, Elon said cash-flow positive is their aspiration in Q1-- which is probably when they'll have less CapEx for sure and much more sales with the X ramp-up. Anyone have thoughts on this?

Right on. Mirrors my understanding and concerns for the Q4 earnings. Still think Tesla will get close to break-even, but not above.

 

[ludicrousspeed]

The other thing the market will care about, that we don't even talk about any more is EPS. If the capex spending is down, it will quiet the "cash burn" narrative which is keeping a lid on the stock price.

I agree that dealing with "cash burn" is the most important narrative. It is important, however, to understand that cash burn, or change in cash, is associated with Free Cash Flow, not EPS. Positive Free Cash Flow (hopefully in Q1 2016) will be the biggest catalyst for the foreseeable future imo.

 

[stealthology]

About a month ago during the Q3 call, Tesla stated (either Elon or Deepak) that "Q4 is peak spending for the Model X investment". A lot of the equipment, tooling, etc is paid off. During the same call, they also made the statement of "feeling very confident to be producing several hundred X's per week by sometime next month [Dec]."

So. Hopefully the CapEx spend in Q4 is not a big surprise to analysts and Wall St., since Tesla themselves basically said we're hardly going to deliver any X's in Q4.

On the bright side (hopefully), it does appear Tesla has been running some promos to get rid of some inventory cars (they count as new sales), as well as more recently running some leasing specials. Could these inventory cars & leases boost profit/margin/EPS a good bit?

 

[Johan]

Hmm... Triple witching day and max pain at $227.5 on low volume. Buy calls on market close?

My only concern is there are inly a few good trading days left this year.

 

[Blip]

Hmm... Triple bitching day...

Hm. Typo? [emoji6]

 

[Curt Renz]

Hmm... Triple bitching day and max pain at $227.5 on low volume. Buy calls on market close?

Share price moves during a major options expiration day are often reversed the following Monday.

 

[ev-enthusiast]

Yes, that's their hope. One day of manipulative stock selling can more than match what retail traders have spent on options during the quarter. Often nudges by hedge fund manipulators to push a stock downward can result in a cascade of stop loss limits being hit by weak longs and day traders, thus enhancing the manipulators' efforts. But the manipulators would implement such a plan only in circumstances in which they have determined that profit is likely. Afterward they would likely buy back the shares they sold in the manipulation as soon as possible. It's not an exact science, but the hedge funds play the odds when they appear to be in their favor.

As someone without a background in finacials I would basically imagine that there needs to be a lot of money in the options market compared to the stock market as a prerequisite.
In case most market participants only buy/sell real shares, and only few options are on the market, such a scenario could not pay off for the market manipulators?

 

[Johan]

Hm. Typo? [emoji6]

Yes. Sorry. Fat fingers and too much wine

 

[Curt Renz]

As someone without a background in finacials I would basically imagine that there needs to be a lot of money in the options market compared to the stock market as a prerequisite.
In case most market participants only buy/sell real shares, and only few options are on the market, such a scenario could not pay off for the market manipulators?

It's not how much money is in the stock market, but how much is actually involved in trading on options expiration day. The vast majority of outstanding shares are not traded on any particular day. However, all of the options positions previously opened during the quarter (or earlier) and destined to expire on the quarterly expiration day are either closed, exercised or expire that day.

 

[Bobbyducati]

hopefully we can get to $240 next week. i really hoped we'd get there this week (nothing particularly special to me about that number, just would like to see it).

 

[ev-enthusiast]

It's not how much money is in the stock market, but how much is actually involved in trading on options expiration day. The vast majority of outstanding shares are not traded on any particular day. However, all of the options positions previously opened during the quarter (or earlier) and destined to expire on the quarterly expiration day are either closed, exercised or expire that day.

I did not see the obvious, thank's for pointing this out. This is the reason for the trading volume being that important during options expiry day. The more volume, the higher the costs for the manipulation could be. The lower the volume, the smaller the costs for the manipulation could be. And as the manipulator would try to even out his position the next Monday, it is not the entire share price that counts, it is only the delta between shares sold/bought on Friday versus shares bought/sold the next Monday, correct?

 

[Curt Renz]

I did not see the obvious, thank's for pointing this out. This is the reason for the trading volume being important during options expiry day. The more volume, the higher the costs for the manipulation could be. And as the manipulator would try to even out his position the next Monday, it is not the share price that counts, it is only the delta between shares sold/bought on Friday versus shares bought/sold the next Monday, correct?

Yes.

 

[ev-enthusiast]

Share price moves during a major options expiration day are often reversed the following Monday.

Some time ago I made some small gambles on this post max pain SP behaviour. I made some small money on these trades.
Personally this feels a bit like gambling and not really like investing, but with only very small money it was fun.
Personally I feel most comfortable with stocks.
It is easier for me to trade on a rebound after a max pain manipulation compared to seeing a max pain move coming. As I am always way too bullish I can never imagine a Friday drop to max pain like today until I see it, and then it is already way too late

 

[esk8mw]

Some time ago I made some small gambles on this post max pain SP behaviour. I made some small money on these trades.
Personally this feels a bit like gambling and not really like investing, but with only very small money it was fun.
Personally I feel most comfortable with stocks.
It is easier for me to trade on a rebound after a max pain manipulation compared to seeing a max pain move coming. As I am always way too bullish I can never imagine a Friday drop to max pain like today until I see it, and then it is already way too late

I've been following pretty closely for a while and it seems TSLA is quite susceptible to max pain theory. Next time I see this phenomenon playing out, I'm going to buy a small amount of at the money weekly calls for the following week right at market close on Friday and see what happens the following week.

 

[Hogfighter]

Yes. Sorry. Fat fingers and too much wine

Too much wine? No such thing.

 

[AlMc]

Hmm... Triple witching day and max pain at $227.5 on low volume. Buy calls on market close?

My only concern is there are inly a few good trading days left this year.

Hm. Typo? [emoji6]

Johan, Best post of the week my friend

 

[Auzie]

Johan, Best post of the week my friend

I second this

 

[Johan]

Johan, Best post of the week my friend

I corrected it. Being PC is important I heard, "across the pond".

We've progressed to whiskey now btw.