Short-Term TSLA Price Movements - 2016

[callmesam]

From the 10-Q:

"We may become subject to product liability claims, which could harm our financial condition and liquidity if we are not able to successfully defend or insure against such claims.

Product liability claims could harm our business, prospects, operating results and financial condition. The automobile industry experiences significant product liability claims and we face inherent risk of exposure to claims in the event our vehicles do not perform as expected resulting in personal injury or death. We also may face similar claims related to any misuse or failures of new technologies that we are pioneering, including autopilot in our vehicles and our Tesla Energy products. A successful product liability claim against us with respect to any aspect of our products could require us to pay a substantial monetary award. Our risks in this area are particularly pronounced given the limited number of vehicles and energy storage products delivered to date and limited field experience of our products. Moreover, a product liability claim could generate substantial negative publicity about our products and business and would have material adverse effect on our brand, business, prospects and operating results. We self-insure against the risk of product liability claims, meaning that any product liability claims will have to be paid from company funds, not by insurance."​

It's not simply that an Autopilot vehicle crashed, it's if the Autopilot caused the crash. In this case, ALL OF THE EVIDENCE indicates that the crash was caused by two intervening events:

1. The truck driver failed to yield the right of way and
2. The Tesla driver failed to notice the truck

If the accident had been that Autopilot drove itself off the road killing someone, then a 10-Q event requiring disclosure MIGHT be required. Tesla looked at the evidence, decided that the crash had other causes (i.e. NOT AUTOPILOT). If there was a lawsuit filed due to the accident, Tesla would have to reveal that information.

But in this case, no autopilot crash and no claim means that there is not yet any MATERIAL INFORMATION. In this case, there have been NO claims by the truck driver or the family of the deceased, only an investigation was opened by NHTSA. Nobody other than the press is claiming that Autopilot is at fault (based on zero information) and no family member of the deceased has made ANY claim.

Just another example of the FUD and failure to perform an actual analysis of the 10-Q.

 

[esk8mw]

What do you think they're resting their position on? Perhaps the distinction is an accident caused by AP as opposed to an accident with AP turned on.

(Not to start a debate on whether AP caused the accident or not but I think it is Tesla's position that it did not - it worked as designed.)

Mike

Unless I'm missing something, the 10-Q does not call out an AP accident as a material event. Here's the closest language I found:

"Product liability claims could harm our business, prospects, operating results and financial condition. The automobile industry experiences significant product liability claims and we face inherent risk of exposure to claims in the event our vehicles do not perform as expected resulting in personal injury or death. We also may face similar claims related to any misuse or failures of new technologies that we are pioneering, including autopilot in our vehicles and our Tesla Energy products. A successful product liability claim against us with respect to any aspect of our products could require us to pay a substantial monetary award. Our risks in this area are particularly pronounced given the limited number of vehicles and energy storage products delivered to date and limited field experience of our products. Moreover, a product liability claim could generate substantial negative publicity about our products and business and would have material adverse effect on our brand, business, prospects and operating results. We self-insure against the risk of product liability claims, meaning that any product liability claims will have to be paid from company funds, not by insurance."

It is an extreme stretch to say that this language suggests all accidents having anything to do with AP is a material event. As usual, this is standard CYA language put in the risk factors section to alert people of every possible negative scenario.

Obviously, a successful and major products liability claim poses a risk to every manufacturer. I agree that if somehow Tesla had a major claim brought against them related to AP failure (which wasn't public, again, very unlikely scenario), and Tesla failed to disclose that fact to secondary investors, that could be materially misleading. However, that's not even close to what happened here. This was an event where the AP wasn't even responsible and worked as intended. The driver probably wasn't paying attention and the semi have have been at fault for the turn as well. No suit was brought against Tesla that I'm aware of, and definitely wasn't before the secondary. In actual operation, as Elon pointed out, the event did not have a material impact on stock performance (it went up).

The story is just a complete joke, 100%.

 

[esk8mw]

From the 10-Q:

"We may become subject to product liability claims, which could harm our financial condition and liquidity if we are not able to successfully defend or insure against such claims.

Product liability claims could harm our business, prospects, operating results and financial condition. The automobile industry experiences significant product liability claims and we face inherent risk of exposure to claims in the event our vehicles do not perform as expected resulting in personal injury or death. We also may face similar claims related to any misuse or failures of new technologies that we are pioneering, including autopilot in our vehicles and our Tesla Energy products. A successful product liability claim against us with respect to any aspect of our products could require us to pay a substantial monetary award. Our risks in this area are particularly pronounced given the limited number of vehicles and energy storage products delivered to date and limited field experience of our products. Moreover, a product liability claim could generate substantial negative publicity about our products and business and would have material adverse effect on our brand, business, prospects and operating results. We self-insure against the risk of product liability claims, meaning that any product liability claims will have to be paid from company funds, not by insurance."​

It's not simply that an Autopilot vehicle crashed, it's if the Autopilot caused the crash. In this case, ALL OF THE EVIDENCE indicates that the crash was caused by two intervening events:

1. The truck driver failed to yield the right of way and
2. The Tesla driver failed to notice the truck

If the accident had been that Autopilot drove itself off the road killing someone, then a 10-Q event requiring disclosure MIGHT be required. Tesla looked at the evidence, decided that the crash had other causes (i.e. NOT AUTOPILOT). If there was a lawsuit filed due to the accident, Tesla would have to reveal that information.

But in this case, no autopilot crash and no claim means that there is not yet any MATERIAL INFORMATION. In this case, there have been NO claims by the truck driver or the family of the deceased, only an investigation was opened by NHTSA. Nobody other than the press is claiming that Autopilot is at fault (based on zero information) and no family member of the deceased has made ANY claim.

Just another example of the FUD and failure to perform an actual analysis of the 10-Q.

Creepy, we wrote pretty much the same thing at the same time. Get out of my head!

 

[Papafox]

From the 10-Q:

"We may become subject to product liability claims, which could harm our financial condition and liquidity if we are not able to successfully defend or insure against such claims.

Product liability claims could harm our business, prospects, operating results and financial condition. The automobile industry experiences significant product liability claims and we face inherent risk of exposure to claims in the event our vehicles do not perform as expected resulting in personal injury or death. We also may face similar claims related to any misuse or failures of new technologies that we are pioneering, including autopilot in our vehicles and our Tesla Energy products. A successful product liability claim against us with respect to any aspect of our products could require us to pay a substantial monetary award. Our risks in this area are particularly pronounced given the limited number of vehicles and energy storage products delivered to date and limited field experience of our products. Moreover, a product liability claim could generate substantial negative publicity about our products and business and would have material adverse effect on our brand, business, prospects and operating results. We self-insure against the risk of product liability claims, meaning that any product liability claims will have to be paid from company funds, not by insurance."​

It's not simply that an Autopilot vehicle crashed, it's if the Autopilot caused the crash. In this case, ALL OF THE EVIDENCE indicates that the crash was caused by two intervening events:

1. The truck driver failed to yield the right of way and
2. The Tesla driver failed to notice the truck

If the accident had been that Autopilot drove itself off the road killing someone, then a 10-Q event requiring disclosure MIGHT be required. Tesla looked at the evidence, decided that the crash had other causes (i.e. NOT AUTOPILOT). If there was a lawsuit filed due to the accident, Tesla would have to reveal that information.

But in this case, no autopilot crash and no claim means that there is not yet any MATERIAL INFORMATION. In this case, there have been NO claims by the truck driver or the family of the deceased, only an investigation was opened by NHTSA. Nobody other than the press is claiming that Autopilot is at fault (based on zero information) and no family member of the deceased has made ANY claim.

Just another example of the FUD and failure to perform an actual analysis of the 10-Q.

To add to callmesam's points...
The 10-Q statement about autopilot liability was inserted in case of a lawsuit stemming from the malfunctioning of the autopilot system. At this point, we see no lawsuit, and at this point we see no malfunctioning of the autopilot system. As the hardware manufacturer stated, the current hardware is not designed to prevent collisions with certain vehicles in a lateral positioning. The current system is designed to prevent a collision with the rear end of the vehicle ahead. Thus, you have no lawsuit and no malfunctioning of the autopilot, two points that prevent the 10-Q warning from being valid in this instance.

Edit: double-creepy

 

[mrdoubleb]

Why would Facebook want a manufacturing guy? Do they make anything?

Money?

 

[DrJohnM]

Tesla’s (TSLA) stock could actually benefit from recalls, but not the ones you are thinking

On the subject of recalling shorted stock

Dusaniwsky found through his analysis that there were already over 1.5 million shares of Tesla’s stock recalled yesterday and almost 1 million shares recalled on July 1st, which the researcher links to the upcoming vote on a possible merger between Tesla and SolarCity

 

[Lump]

CNBC video of releasing "material" info discussion.

Tesla's controversy: Are self-driving cars safe?

 

[dirtyofries]

Could someone with better knowledge than myself explain to me how seemingly every day for awhile the stock tanks in the AH and then regains all the lost ground, only to then tank again and regain the next day?

Like, what's driving that action and is there a demographic reason based on trading times? Is it a news cycle thing?

Feels like a weird game of back and forth.

 

[Papafox]

CNBC video of releasing "material" info discussion.

Tesla's controversy: Are self-driving cars safe?

I smiled when I saw the "26% off recent highs" message flash onto the screen during the discussion because CNBC felt the need to add more fear to the event. So typical.

 

[Papafox]

Could someone with better knowledge than myself explain to me how seemingly every day for awhile the stock tanks in the AH and then regains all the lost ground, only to then tank again and regain the next day?

Like, what's driving that action and is there a demographic reason based on trading times? Is it a news cycle thing?

Feels like a weird game of back and forth.

Yesterday's dip in after-hours was likely caused by the Pennsylvania crash of a Model X which the owner claims was an autopilot crash but Tesla has apparently reviewed the logs and determined that autopilot was not on. So, today the market discounted that story. A similar story played out on 6/30 with the fatal autopilot accident in after-hours trading and then the market discounted the story the next day as further details became available.

Nonetheless, a back and forth is indeed going on today. TSLA was following the NASDAQ right up until TSLA approached going green and then leveled off prematurely. Since then it has been up and down in an effort to hold the green. While I have seen little obvious short-seller manipulation in the past week, we're seeing some right now in a game of "bop the mole" every time TSLA sticks its head up into the green. Shorts are fearful of TSLA starting upward in the current environment with short-share recalls and so you do indeed see some game-playing underway as I type.

 

[Gerardf]

I have not yet seen this level of panic on SA yet.
I almost lost count of the negative TSLA the articles published there this week. Two were posted only one minute apart today.

 

[schonelucht]

I think we have known for a while now that all the elements of a perfect sh*t storm for shorts are all there. It's just a matter of right trigger. We looked for FCF+ signals early in the year, unfortunately that didn't pan out due to model-3 ramp pull in, we looked for strong delivery numbers in Q2 that didn't happen, now we have this merger trigger, which seems to necessitate recall of lent shares or worst case we have q3 deliveries (or it's guidance in Q2 ER). Overall, it looks like somewhere over the next few weeks to few months, there would be a strong rally triggered by a short squeeze.

There are always two sides to a medal : what if the vote for the merger happens before the squeeze is triggered? Then, suddenly millions of recalled shares become available again for shorts. If they take the opportunity, they may very well drive the stock down enough to be able to shake out even stronger longs.

 

[esk8mw]

There are always two sides to a medal : what if the vote for the merger happens before the squeeze is triggered? Then, suddenly millions of recalled shares become available again for shorts. If they take the opportunity, they may very well drive the stock down enough to be able to shake out even stronger longs.

I think the idea is that institutions need to recall the shares prior to the merger in order to vote them. Once recalled, shorts are forced to cover. Thus, the increased covering must occur prior to the vote if this theory holds water.

I agree that after the vote the shares would become available again to short and possibly drive down the price if there's bad news triggering short interest.

 

[farzyness]

I think this entire AP faux-problem this past week or two is going to start paying dividends for Tesla. This whole thing has essentially been continued free marketing for the company and its capabilities/ambitions.

Remember - Elon himself said it's "probably unwise" to be short TSLA very recently. 2016 may end up being a pretty good year.

 

[sunhelm]

There are always two sides to a medal : what if the vote for the merger happens before the squeeze is triggered? Then, suddenly millions of recalled shares become available again for shorts. If they take the opportunity, they may very well drive the stock down enough to be able to shake out even stronger longs.

I don't think that is sequentially correct when there are zero shares to short. Before the vote happens, shares have to be recalled. The escalating recall events could then trigger the short squeeze, before even the first vote is cast.

 

[sunhelm]

I think the idea is that institutions need to recall the shares prior to the merger in order to vote them. Once recalled, shorts are forced to cover. Thus, the increased covering must occur prior to the vote if this theory holds water.

I agree that after the vote the shares would become available again to short and possibly drive down the price if there's bad news triggering short interest.

Lol. Looks like everyone here is in your head, E!

 

[sundaymorning]

Saw a delivery truck with 6-8 model X on the 405 freeway today heading Southbound towards Log Beach

 

[SBenson]

With the high valuation of Tesla stock and continuing bad news, things could easily go the other way. That's what makes a market. Fun to see how this plays out, don't keep all your eggs in one basket!

The valuation question has been there since the beginning of time. If anything Tesla is making strides in growing into its valuation. Its not very visible yet, especially with the last 2 quarters of deliveries. But imagine when Tesla delivers 24K units and produces a positive EPS (while still continuing to spend/invest for the future). In any case the valuation question didn't bother some institutions that held unto the shares until now. Why will they change their minds on valuation now? In simple words, what's new? what's changed?

The bad news part. All of the bad news is already out. Are you expecting that people/institutions will slowly consider everything that is coming out now and then sell some point into the future? Don't hold your breath on that. Or is your point, the bad news somehow is indicative of a trend and there will be more/new bad news? That's pretty weak speculation don't you think?

Today just about everywhere you turn there is a big bad negative headline. Everywhere. Financial media, analyst reports, regular news sites, SA in all out panic mode. Sky has already fallen.

Alas with no effect on stock price. All this is a simple game to try to cover the shorts in an orderly manner by shaking the week longs.

Given the amount of ammo used by shorts today, what will they do tomorrow, and day after, and the day after? Aren't they running out of ammo?

 

[Jayjs20]

I'm suddenly reminded of when the Koch brothers openly said they're going to start pouring millions of dollars into destroying electric cars.

 

[SBenson]

I'm suddenly reminded of when the Koch brothers openly said they're going to start pouring millions of dollars into destroying electric cars.

They would have to hire a sniper. But even then it's probably too late now.