Short-Term TSLA Price Movements - 2016

[Drax7]

Credit Suisse downgrades SolarCity based on increased (in their view) probability of the deal that grossly undervalues SolarCity, going through. So they seem to suggest that the deal is bad for SolarCity, and, by extension, good for Tesla. Digest of the note via StreetInsider (pay wall):

Credit Suisse downgraded SolarCity (NASDAQ: SCTY) from Outperform to Neutral with a price target of $27.00 (from $38.00), on increased probability of a deal with Tesla (NASDAQ: TSLA) closing.

Analyst Patrick Jobin commented, "On deeper reflection of the proposed acquisition of SCTY by TSLA, and discussions with TSLA shareholders, we increase our probability of a deal being consummated at, or near, the proposed terms to 60-70% despite our concerns on corporate governance along with limited strategic and financial rationale for the transaction in the near-term. As a consequence, we lower our SCTY target price to $27 and downgrade our rating to Neutral to reflect the preliminary acquisition proposal at what now equates to ~$25.9-$27.8 per share at the 0.122x-0.131x exchange ratio presenting only limited upside from current levels (the actual mechanics of the proposal are not disclosed and no definitive agreement has been reached although there is apparently unanimous support from both boards). Note that our fundamental view that SCTY is grossly undervalued remains unchanged."

For an analyst ratings summary and ratings history on SolarCity click here. For more ratings news on SolarCity click here.

Shares of SolarCity closed at $23.93 yesterday.

Funny, I don't like this deal at any price, and he thinks it's undervalued.
It goes to show how limited my understanding could be. Got to keep
An open mind when in doubt.
Mismatched duration, dubious synergies, high debt, no profits, liquidity
Risk , dubious value proposition to consumer, etc., are not obstacles.
Maybe I don't have enough information to make a rational decision.

 

[vgrinshpun]

Funny, I don't like this deal at any price, and he thinks it's undervalued.
It goes to show how limited my understanding could be. Got to keep
An open mind when in doubt.
Mismatched duration, dubious synergies, high debt, no profits, liquidity
Risk , dubious value proposition to consumer, etc., are not obstacles.
Maybe I don't have enough information to make a rational decision.

You might want to look into aggregation of the installed distributed battery capacity and sale of services to Utilities. Uber for battery storage, if you will, by Tesla.

 

[VanE]

Funny, I don't like this deal at any price, and he thinks it's undervalued.
It goes to show how limited my understanding could be. Got to keep
An open mind when in doubt.
Mismatched duration, dubious synergies, high debt, no profits, liquidity
Risk , dubious value proposition to consumer, etc., are not obstacles.
Maybe I don't have enough information to make a rational decision.

You view the merger from a TSLA standpoint. Credit Suisse viewed it in that article from a SCTY standpoint. It could be that both of you are right, SCTY might be undervalued for this merger as an individual company, but could be absolutely worthless as a part of TSLA.

Although I don't believe that. I think that IF Tesla's management integrates the company nicely with Tesla Motors it could be one of the best deals of this century (without exaggeration) and this merger will be in the business books of our (grand)children. But this is a big if, when they integrate SolarCity poorly it will have almost no added value for Tesla and might even be very bad for the Tesla brand.

 

[MartinAustin]

TSLA has steadily climbed from $204's to $208's in the last 2 hours. I wonder if this signals some common sense on the part of who's at fault.

I have to say, if there was a forum like this for every other auto accident, there'd be a lot less mystery out there. I believe the wise TSLA investors (long or short) check what's going on here before concluding if the hyperbole out there is true or not.

 

[VanE]

TSLA has steadily climbed from $204's to $208's in the last 2 hours. I wonder if this signals some common sense on the part of who's at fault.

I was wondering the same. I think it is because most longs aren't willing to sell today because of this minor dip because they might miss out on a (relatively) large rise on Tuesday.

 

[schonelucht]

I think Tesla is merely following the broader market. So my reading is that the market is saying that the incident isn't that important rather than something about where the blame lies. I may suffer from confirmation bias because I think the same thing.

 

[NOLA_Mike]

The news headlines are (and I paraphrase):

This Incident Could SLAM the Brakes on Driverless Cars
Tesla Autopilot Accident Shows Why Lidar is the Way to Go

Etc.

When the original cruise control was introduced and someone ran in to the back of another car with cruise control engaged did it get the same scrutiny?

Geez...

 

[geneclean55]

I think Tesla is merely following the broader market. So my reading is that the market is saying that the incident isn't that important rather than something about where the blame lies. I may suffer from confirmation bias because I think the same thing.

For the market to think that the incident is not that important, i can think of two main scenarios.

1) The number of incidences that can generally be attributed to AP problems are very very few
or
2) Due to the circumstances of this particular crash, people are ambivalent as to who to blame

 

[vgrinshpun]

Seems that TSLA could fully recover by the market open. Another digest from StreetInsider:

RBC Capital Markets analyst Joseph Spak said the incident presented more of a "headline risk" than real risk to Tesla.

"The bottom line is that no autonomous vehicle will ever be perfect, to say nothing of semi-autonomous or TSLA's Autopilot (which we would classify as low level semi-autonomous). The idea of autonomous is that it’s safer than a human driver."

"Bottom line, the media attention may weigh (the first major incident was always a headline risk), but we don't think much has changed," he said in a client note

 

[dc_h]

The news headlines are (and I paraphrase):

This Incident Could SLAM the Brakes on Driverless Cars
Tesla Autopilot Accident Shows Why Lidar is the Way to Go

Etc.

When the original cruise control was introduced and someone ran in to the back of another car with cruise control engaged did it get the same scrutiny?

Geez...

Tesla induced irrational response syndrome (TIIRS).
Can you imagine if a Tesla had killed Anton Yelchin?

I in no way want to be insensitive to the personal loss. He sounds like a great person, but every human loss should not result in major policy decisions. This guy would not have wanted his AP turned off due to an unusual accident, and the long term benefits versus the risks and empirical results to date, would support continued use and improvement of AP.

 

[tanner]

Seems that TSLA could fully recover by the market open. Another digest from StreetInsider:

RBC Capital Markets analyst Joseph Spak said the incident presented more of a "headline risk" than real risk to Tesla.

"The bottom line is that no autonomous vehicle will ever be perfect, to say nothing of semi-autonomous or TSLA's Autopilot (which we would classify as low level semi-autonomous). The idea of autonomous is that it’s safer than a human driver."

"Bottom line, the media attention may weigh (the first major incident was always a headline risk), but we don't think much has changed," he said in a client note

Operative word: "seems"... Look at TSLA from pre-market yesterday and look at the hit it took at the open. Not saying it will happen today (no one can predict the future), but just posting out the fact that we should all remain cautious.

 

[CALGARYARSENAL]

Operative word: "seems"... Look at TSLA from pre-market yesterday and look at the hit it took at the open. Not saying it will happen today (no one can predict the future), but just posting out the fact that we should all remain cautious.

Nobody worries more than you Tanner. The market climbs a wall of worry. Tesla will make new ATH within a month or two.

 

[electracity]

Wow

Musk seems to have acknowledged that solarcity's customer acquisition cost is about equivalent to the total installed cost of a typical residential solar system in Australia. Yet the Credit Suisse guy said that solarcity is grossly undervalued. Both can't be true.

 

[tanner]

Nobody worries more than you Tanner. The market climbs a wall of worry. Tesla will make new ATH within a month or two.

Eh... I'm cautiously optimistic

 

[JRP3]

Any gasoline vehicle in the same situation would have been completely crushed and probably exploded.

If you are referring to the recent incident where the Tesla passed under the tractor trailer and was sheared at the windshield I don't think an ICE would have performed any differently. The drivetrain and fuel system were not involved.

 

[CALGARYARSENAL]

Eh... I'm cautiously optimistic

That a boy. Tsunami of hurt. Expect it. This is the stock of a lifetime. I have never been so positive and my track record has been lucky, lets put it that way.

 

[madodel]

Not all news paints AutoPilot as bad. Tesla Motors, Inc. Confirms NHTSA's Preliminary Evaluation of Autopilot -- The Motley Fool

 

[tanner]

That a boy. Tsunami of hurt. Expect it.

How so? I'm not short on TSLA, I'm long on some shares I acquired when it dipped last night (wish I also would have gotten in at the 203-202 area in premarket, would have been fantastic).

Edit: saw your edit... Of course it is. If things go the way Elon plans with SCTY, Model 3, TSLA Energy, we could be looking at market cap greater than that of AAPL's soon (by "soon" I mean within the next 5 years to a decade).

 

[CALGARYARSENAL]

One last thing for this morning....if the stock goes green.....we are in for a major meltup. That would be the ultimate show of market confidence.

 

[Tenable]

ZERO shares available to short TSLA at IB.