Short-Term TSLA Price Movements - 2016

[ggies07]

I think one of the biggest problems for TSLA + SCTY valuation at this point is the fact that it combines two historically different analysts... energy and automotive. It is hard enough for automotive analysts to understand TSLA, it is now beyond them to handle TSLA + SCTY.

Exactly. So unless they and others on here have followed both industries, it's hard for people to see where this is all going. I made it a priority from day one of investing in Tesla to keep up with the energy industry because I knew it was the other piece of the puzzle. I have seen only a hand full of users on here do the same. If you haven't followed the solar/utility industry and therfore SolarCity, of course you're going to be lost right now.

 

[Gerardf]

I'll play,

Sorry, no lasers

Transportation
Energy
Solar
Launchers (as in rockets to lauch satellites ..)
Autonomy

 

[neroden]

Right now, solar companies are pretty well beat down. Buying SCTY has almost nothing to do with Tesla Motors, it has to do with Tesla Energy.....
I think one of the biggest problems for TSLA + SCTY valuation at this point is the fact that it combines two historically different analysts... energy and automotive.

It's worse than that. The real problem is that SCTY is about 5% a solar energy company, and about 95% a structured finance company.

Merging the energy company with Tesla is something an energy analyst can analyze. But the structured finance company? The energy analysts already couldn't analyze it. SolarCity has an "informational discount" because it's un-analyzable.

If the finance were pulled out into a separate "Tesla Financing" division and the bank analysts were set loose on it, we might see a clear analysis. Or we might not, since I don't think SCTY has released enough information to make such an analysis.

 

[uselesslogin]

Sorry, no lasers

Transportation
Energy
Solar
Launchers (as in rockets to lauch satellites ..)
Autonomy

Ah there it is. But you don't know for a fact yet that the MCT won't involve lasers so we'll see in September.

 

[schonelucht]

TFTF has been bashing Tesla and Elon for years, and now he wants to provoke us
with bullish comments. One cannot take him at his word, the guy hates
tesla and Elon with a passion. Its best to ignore him completely.

Maybe, but closing yourself of from someone risks throwing the baby away with the bath water. For example, his recent comment on MS analysts flipflopping around the integration of SCTY into TSLA is quite interesting.

 

[ggr]

So, this makes no sense. TSLA is down because people think that buying SCTY is a bad thing and will happen. But SCTY is now below where it was when the offer was made, which only makes sense if people think the deal won't happen. Can't have it both ways.

This means, to me, that the market is being irrational, so the obvious move is to buy into it. I'm seeing a bunch of irrationality here, too; maybe my own. Call me a fanboi, but I think it will happen and will be good, and SCTY isn't in financial trouble.

 

[30seconds]

Jeffrey Gundlach

This Bond Guru Calls the Tesla-SolarCity Deal a ‘Confidence Destroyer’

He was a pretty outspoken bull for a while now. First time seeing him being this negative on Tesla.

The guy who told Tesla to stop making cars and just become a supplier to the auto industry?

 

[neroden]

Bottom line, my biggest concern now is if somehow this falls though. Doesn't seem like there's a big chance of that but it'd be pretty bad if that happens.

It will probably fall through, and will deserve to fall through, if Elon doesn't address SolarCity's financial mess. The best things he could do are to
(A) bring transparency to their existing structured finance deals
(B) present a plan for moving the company away from its heavy dependence on complex, hard-to-analyze securitizations

 

[Drax7]

Maybe, but closing yourself of from someone risks throwing the baby away with the bath water. For example, his recent comment on MS analysts flipflopping around the integration of SCTY into TSLA is quite interesting.

Its a dynamic situation, views change all the time.

He is mocking the Morgan Stanley analyst.

Either way you see it, eventually Elon will be right, now its a matter of how to capitalize on it.

 

[neroden]

4. As I said, I'm not familiar with the risk of SCTY's business and espcially financial model. But, assuming constant instrest rate environment and very low defaults from users, I see a possible silver lining here - whole sales team get laid off. SCTY stop growing as they were. The sales cost for SCTY in the latest Q was almost 30% of their total cost. Reduce this to 0, then you get positive cash flow for the next 20 years or so. Focus only on commercial/grid level and forget about residential solar. I think this is the only way to realize Elon's "significantly reduce operation cost" and "generate positive cash flow in 3-6 months".

Yeah, I like this scenario. Still doesn't address the unreadability of SCTY's balance sheet.

In this scenario, having SCTY within TSLA could be a good thing.

5. I have next to 0 knowledge about the other GF in NY.

The Silevo factory. Musk says he knows about the details of production and believes it will produce high-efficiency solar panels at the price of cheap Chinese panels. If he's right, it's extremely valuable.

 

[Papafox]

So, with TSLA down a bit more than 10% yesterday (compared to regular session closing prices), is short selling restriction in place today?

Edit: Found it. Looks like short-selling restrictions are in place today:
http://www.nasdaqtrader.com/trader.aspx?id=ShortSaleCircuitBreaker

 

[Krugerrand]

Look, Elon is indeed very smart. However something I've come to learn is that it is the smart ones you have to watch out for. They are so smart that they think they can do anything...

I believe you meant this comment as a negative. That a person thinking they can do anything is dangerous? untrustworthy? off their rocker? Sometimes that would be true. And sometimes when it's not true they can make mistakes. Sometimes those mistakes can be fixed sometimes not, but the so smart people always learn from them which tends to make them even smarter.

Sometimes they think they can start a new car manufacturing company in of all places, Silicon Valley!, make an entirely new kind of car and have it be the best in the world. Sometimes they think they can start a private rocket company, charge way less than anyone else in the world, and land reuseable rockets on a postage stamp in the ocean. Sometimes they think they can turn a company into an Apple valued company only to change their minds a short time later and imagine it as a $1 Trillion valued company by conquering a number of industry all at once.

One thing is for sure, so smart people are never dull and the one in question has only the best intentions for us all.

 

[MitchJi]

Tesla Motors Inc (TSLA) Rating Reiterated by Morgan Stanley

June 22, 2016
Inc (NASDAQ:TSLA)‘s stock had its “overweight” rating reiterated by equities research analysts at Morgan Stanley in a research report issued to clients and investors on Wednesday. They currently have a $333.00 price objective on the electric vehicle producer’s stock. Morgan Stanley’s price objective points to a potential upside of 51.63% from the company’s current price.

 

[X Yes?]

So, this makes no sense. TSLA is down because people think that buying SCTY is a bad thing and will happen. But SCTY is now below where it was when the offer was made, which only makes sense if people think the deal won't happen. Can't have it both ways.

This means, to me, that the market is being irrational, so the obvious move is to buy into it. I'm seeing a bunch of irrationality here, too; maybe my own. Call me a fanboi, but I think it will happen and will be good, and SCTY isn't in financial trouble.

Here's the problem, you've now got analysts and former perma bulls that have lost confidence in EM, whether the deal goes through or not.

 

[neroden]

Just a few things I keep seeing that I feel makes no sense:

Home Powerwall and home solar synergy.

This is not very important at all for Tesla. According to Elon on calls last year, Powerpack was expected to be 90%+ of TE's business, with Powerwall at the much lower end.

Read this as Commercial Powerpack and Commercial Solar synergy.

While eventually that may be a big deal, doing such a huge merger just to make it slightly increase sales in a product that is 1/10th as popular doesn't seem like much of a worthwhile investment.

If Solar City was a utility-scale solar company, this deal would make far more sense here.

They have some utility-scale business, like the Kauai solar/battery farm. With the Silevo panels I think they expect to get more utility-scale business.

SCTY acquisition/sales cost

Given the above (completely opposite cultures/acquisition methods for customers), this seems like an incredibly minimal benefit.

I believe Musk is implying that he'll fire SolarCity's sales department entirely.

Solar panels v. electric cars

Solar panel companies are a dime a dozen, and many countries like China have a huge inherent advantage here. Tesla is unique and an absolute market leader, far ahead of other companies. So is SpaceX. Solar City, not so much. There's nothing unique or innovative with Solar City. Unless Musk has some radical plans to transform Solar City (somehow managing three companies instead of two), this won't be changing.

I'm sure he does plan to transform it into a company with a unique and valuable product; every question in the conference call got steered back to the Silevo factory. He obviously really, really wants Silevo. I'm worried that he hasn't really thought about the structured finance company which owns Silevo.

Interest, debt, risk, etc.

To echo others' concerns, be objective and not subjective in this situation. Objectively Solar City can be strangled by interest rate rises, borrowing costs, or debt refinancing risks with ease. There's almost zero risk that solar panel owners will cause default issues on payments. however owner payments have nothing to do with the tremendous risks of Solar City.

Bingo.

Emotionally, I'd love for Musk to take on Solar City and become the Google of clean energy. I just can't see this happen with Solar City, they could buy a solar panel factory for far less and do far more with it in my opinion.

If Musk presents an exit plan for getting out of SolarCity's financing mess, that would convince me.

 

[Causalien]

Exactly. So unless they and others on here have followed both industries, it's hard for people to see where this is all going. I made it a priority from day one of investing in Tesla to keep up with the energy industry because I knew it was the other piece of the puzzle. I have seen only a hand full of users on here do the same. If you haven't followed the solar/utility industry and therfore SolarCity, of course you're going to be lost right now.

if you can draw some infographics on their finances, it'll help us pure TSLA investors understand everything faster

**Edit I think I quoted the wrong quote from the same person. Quote corrected.

 

[neroden]

Yes it is. My original post was a reaction to someone who thought 1.7%/y escalator cost increase for Solarcity PPA was way too high. It isn't.

It's a lot higher than the average rate increase of 0% over the last 10 years which I've seen in my utility area. I've seen delivery rate increases but the supply rate keeps dropping to compensate. Your Utility May Vary.

Delivered energy costs keep rising, and indeed that means rooftop solar energy (through Solarcity or not) usually makes sense.

Well, all I can say is that I ran the numbers recently, and I get Internal Rates of Return below 3%. I can find better investments. :shrug: Your Utiilty May Vary.

 

[X Yes?]

I believe Musk is implying that he'll fire SolarCity's sales department entirely

They did what they had to do, to move the silicon. They are in a commodity business. SCTY is not going to sell itself in the Tesla showroom.

 

[Krugerrand]

This mindset is what made Elon take on way too much with the X, and this SCTY thing.

That's only if you're of the opinion the Model X was a mistake as a whole, rather than the mistake was simply putting too much new tech in the first iteration of it. The latter of course being Elon's position on the topic.

I'm getting there's a sense of urgency and that the best way to get as many earthlings on board as possible, as quickly as possible, and for the least amount of financial investment is to make it super integrated and super easy for them. Turn on your cellphone and order the whole kit and caboodle; car and energy management system for your home. Boom. Done.

 

[neroden]

Ok, maybe this is too simple a solution, but why the f$#@! didn't the proposal go down this way:

(1) SolarCity is split into 2 companies: SolarHardware and SolarFinancing.
(2) Tesla buys SolarHardware, which includes the Panel Factory, hardware installs, and some sales advisors.
(3) Tesla then sells complete energy systems like it does cars. People can choose to lease or PPA through SolarFinancing if they want.

Tesla stockholders would vote for this in an instant. SolarCity stockholders might not!