Short-Term TSLA Price Movements - 2016

[The Blue Owl]

If you owned a few 100k of shares would you want a bunch of random shorts voting for you?

The random shorts cannot vote, since they don't own the shares; they're owned by the random longs they sold to (but your point stands).

 

[jhm]

$500 kWh is crazy. Tesla announced a while ago that their pack cost is under $190 per kWh. That surprised quite a few people. I had previously analyzed their costs and $190 was the worst case price. I believe it's under $170 kWh.

When they announced the GF they said that by the end of 2027 it would conservatively reduce costs by 30%, and by 2020 by 50%, plus any cell chemistry cost reductions. They recently got permits for about $400 million for adding a GF building module plus roughly the same amount for the associated cell manufacturing equipment. But that's 3x the output in the original plans! So I believe that something like 50-70% cost reductions are more likely now.

Yes, the costs should decline quickly.

What is curious about TMP2 is that it appears to back away from utility scale batteries. I get the impression that Musk know Tesla has much better opportunities than building big dumb utility batteries. Plenty of competitors will thin out margins in that space. Where Tesla adds more value is in smart integration. So Powerwalls are a more sophisticated application than utility scale batteries. Powerpacks behind-the-meter are likewise sophisticated. Tesla Semi could be perhaps the most sophisticated application for batteries to date. This application only flies if it can beat the cost of deisel. Truckers will not buy into this for status. They've got to save money on fuel. So this is a potentially higher margin application than utility batteries. It's much easier to beat diesel than natural gas. Moreover, the competition will be much weaker in this space. It leverages Tesla's expertise in a way few can match.

Even so, it is still incredibly important to bring battery storage into the grids of the world. Focusing on behind-the-meter storage can do this and challenge utilities to reach out to other suppliers. So I think the need will be met even as Tesla positions itself within the higher margin segments.

 

[dakh]

Long-term investor or short-term trader, (thread title btw) two opportunities to make a killing isn't of interest you?

The justification is that the big funds will call in shares to vote on the merger. Some are even required to do that. If you owned a few 100k of shares would you want a bunch of random shorts voting for you?

The post I was responding to claimed deliberate action on the part of [able] shareholders to cause short squeeze. I'm no expert but to me it would make more sense if they took steps to accomplish their voting agenda without disturbing share pricing, if they could. I'm not arguing that a squeeze is not gonna happen because they have to recall shares to vote. I'm arguing that they won't try to make it worse.

 

[BornToFly]

I originally thought we would have a sell on the news after the rumor run up. However, as a Tesla believer, I liked what I read so much, that when I went to bed last night, I too was expecting a $5-10 jump in SP. We have to learn that things like the master plan are "sizzle," and they always have a sell on the news, especially because Wallstreet is short sighted, and only thinks about the capital cost to do everything on the list in MP2. They don't seem to understand that vehicle manufacturing is a capital intensive endeavor, but if they raise 20B over 10 years to become a 100B dollar company, than it is worth it.The gigafactory opening, however, is "Steak," and I do expect a bump after the 29th, followed by another drop after Q2 earnings. What worries me is that those two events are very close together, and Q2 earnings might have more downward pull.

 

[Stretch2727]

SMP2 was pretty much as expected for me. I liked the idea he spent some time on the SMP1, as it appeared some in the media did not understand this was not really a secret. I really like the tone and complete openness of Elon. It is a loose road map and vision, not an exact plan. No need to muck it up with a lot of financials or technical analysis.

The smart (or quick) money just saw endless capital needs in the SMP2. Hence the drop today. The stock will be effected by near term execution, deliveries and profits. I believe if Tesla can execute well over the next 1-2 years to fund these long term projects the stock will explode based on this vision. If there continues to be a need for large future capital raises without profitability or positive cash flow I think we will be stuck in the same price range for some time.

 

[dakh]

I expect the real positive catalysts that are coming up would be SCTY (probably as a Tesla division by then) revealing their "differentiated" product, Q3 earnings, maybe a small bump from AP v8 when released if it's seriously awesome, second M3 reveal. I think GF can be a positive catalyst only if there are positive surprises coming out if it. If they just show the factory with some [working] equipment in it, that's pretty much as expected and is priced in already.

 

[theschnell]

I think Q3 ER is going to be awesome, with a very large revenue increase and much better earnings compared to the last several quarters.

I intend to wait until the very bad Q2 ER is done, but listen carefully to guidance. If guidance is strong, then I intend to average in a fairly large (by my standards) position in calls once the volatility from Q2 ER settles down a little.

Even without the share recall, I expect Q3 ER to move the stock significantly upward. If the share recall really continues or accelerates simultaneously, then we will have tsunami of hurt round two. I'm not saying that will happen, but I am saying it could happen. Regardless, I think Q3 ER will be very good to those who are long.

 

[neroden]

So the closing spread for Tesla over SolarCity is $4.10. This is the tightest I've seen it.

Yep, the arbitrage play is disappearing. This had to happen eventually!

Huge buying opportunity, in my view.

Really? The buying opportunity was to load up on SCTY (or bullish SCTY options) over the last month. This is near the monthly high for SCTY.

I should also point out that the closing of the arbitrage gap has been pulling SCTY up, but it also seems to have been pulling TSLA down. Once the gap is closed, that's one less headwind against TSLA.

 

[neroden]

I'm not sure this really is sell the news. Look at the volume... only 2M three hours in. Sure it's a bit more than the volume the last couple days, but this looks more like the majority of volume is made up in a few small increments making it look worse than it actually is. I expect a rebound come monday.

I'm not saying this is it, but there was a huge arbitrage spread between TSLA and SCTY, and now there isn't.

Perhaps the "Master Plan" caused a lot more people to *notice* the SCTY merger proposal (even though it's a month old) and we were seeing arbitrage moves (sell TSLA buy SCTY). The rest of the movement could be general market movement.

 

[neroden]

They need to have a compelling reason to add highway electrification AFTER batteries are ubiquitous.

Overhead wires are cheaper than batteries. Really. You want to know why they aren't used everywhere?

Look, I spent a loooong time looking into the economics of railroads. Several of same principles apply to trucks, and they're pretty simple. If you have high volume, constant operation along a corridor, it makes sense to move the power plant *off the train* so that you don't have to move the weight around. This is true whether the power plant is fuel or batteries. If you have infrequent, sparse usage, then you can't get enough *volume* on the corridor to defray the upfront capital costs of the electric overhead wires, and that's when you want to carry the fuel or batteries on the train with you. Onboard power is a low-volume solution, offboard power is a high-volume solution.

Siemens is initially electrifying a port-to-warehouse-district route, *very* high volume. On this route, you can either haul heavy batteries back and forth all the time... or you can carry a lot less batteries around, by putting some overhead wires up. Energy efficiency.

For truly high-volume routes, trains beat trucks/buses/cars every time, and by a *lot*, because *they are trains*: they can hold more goods or people per vehicle (train vs. truck) while maintaining safe distances between vehicles and going at high speed. (And long "road trains" are impossible for reasons of physics; the jackknifing problem was solved by railways using the conical wheel, but there's no good solution other than putting it on rails.) The capital costs for a railroad track, which is a fairly precise construction, are somewhat higher than for dumping loose asphalt goo in a strip on the ground, so it's cheaper to use road vehicles if traffic volumes are low. (More importantly, railroad *junctions* are expensive compared to traffic lights and especially compared to uncontrolled road intersections, so a system where no single corridor has high traffic doesn't work well for railways.) Roads are essentially a low-density, low-capacity solution -- and they're great for that. Roads scale up *really badly*, and the economics of expressways is *really questionable*.

The main reason these port-to-warehouse routes aren't operated by trains is the diversity of warehouses at the end; the trucks follow the same corridor most of the way and then diverge for the last mile or two.

It's often worth analyzing economic situations to see where the economies of scale are and where low-volume solutions fail at high volume, but also where the upfront costs of high-volume solutions mean that they don't work for low-volume operation. It's very informative, *particularly* in transportation, but also in other areas.

I'd also point out the obvious that the trucking power pack model above is not at all incompatible with Siemens system. Trucks are only loading the packs they need for the next leg. If that leg includes an electric highway, it minimizes the number of packs needed for that leg, assuming that the tractor is fitted to use the electric highway. So this means the cost of using the electric highway power must be cheaper than using battery pack power. So if it bright and sunny at the moment then the electric highway could be cheaper.

Absolutely correct. Think about wear and tear on the batteries, however. Assuming price parity (a reasonable assumption), then for truckers who own their batteries or where the pricing makes their company responsible for battery replacement cost, the electric highway will be preferred by the truckers whenever available, to save battery lifespan.

 

[larmor]

IMO only: huge buying opportunity for TSLA. They have announced how they will disrupt many differing industries. They are becoming vertically integrated. They have learned many mistakes from the roadster, model s and x, and they admit them. They are making expensive widgets and have many orders to fill. This is not rocket science-- that is space X. We should cheer the negativity that will allow more to load the boat or truck(s) in this case...

Since they aren't making wireless power transfer yet, i better get working to see what i can dig up...

 

[neroden]

so, way OT. will you austinEV be at the worldcon in KC in mid-late august?

Dunno about him but I will be

 

[neroden]

I would submit that Musk is not looking to electrify shipping at this time in part because shipping will be in decline.

I'm guessing it's a few other things:
(1) ships are slow, and our "want it now" society has caused shipping to move to trains, trucks, and airplanes. Shipping is mostly intercontinental now.
(2) Intercontinental shipping is badly unregulated, and mostly uses "bunker fuel" (nasty garbage). It's rather hard to compete on price with garbage; it's like the situation with gasoline in the 1900s. Until some international environmental regulations on shipping start happening, it'll be a tough market

I should note that Musk badly underestimates the efficiency of railroads (he's done this repeatedly), perhaps because he has never looked at the basic physics advantages which they have. (Does he even know about the conical wheels?) He can be really dumb in areas where he *has not done the basic research*.

I hope he does his research before investing stockholder money in his really stupid bus ideas. He wrote "eliminating the center aisle and putting seats where there are currently entryways," -- but we had streetcars, railroad trains, and buses like that in the 19th century. He should have bothered to look up why we don't have them any more. The situations which caused them to be eliminated (a -- safety for doorless systems, b -- cost of doors) hasn't changed. The aisle was a *technological improvement*."

Given the hassle he's had with car doors, I'd think Musk would be way more leery of designing a bus which had to have a door for each row. But apparently he hasn't bothered to think it through at *all*. The utter ignorant nonsense regarding buses is actually the most disappointing thing; the rest of the Master Plan seems well thought out.

 

[neroden]

And why can't shorts slowly accumulate a bunch of shares days ahead, only to sell in a big push right after the announcement?

It is possible for short-sellers to borrow stock in advance days or weeks before shorting it. This is a service offered by some brokers. Just FYI.

 

[neroden]

In the case of the semi, you can swap the semi instead of the battery. Think 'pony express' with semi's.

Bingo. They already DO this, swapping shipping containers or truck bodies from semi to semi.

 

[neroden]

He very accurately identified 10 years ago, that you shouldn't try to change some of basic human nature. Yes most folks drive like 30 miles or less a day and a car's looks is not material to its function, yet people will never buy ugly weirdmobils with 80 miles of range even if technically they would do the job - and far more efficiently.

I think the same may be true in the ownership vs sharing/renting/automated bus discussion.

Yeah. Musk identified early on that people irrationally wanted private cars with more range than they needed... and provided that. He also did his historical research on early car companies. Which is why it's odd that he is being stupidly utopian about human nature with regard to car lending, and hasn't done his historical research on public transportation.

 

[ajax]

I hope he does his research before investing stockholder money in his really stupid bus ideas. He wrote "eliminating the center aisle and putting seats where there are currently entryways," -- but we had streetcars, railroad trains, and buses like that in the 19th century. He should have bothered to look up why we don't have them any more. The situations which caused them to be eliminated (a -- safety for doorless systems, b -- cost of doors) hasn't changed. The aisle was a *technological improvement*."

Given the hassle he's had with car doors, I'd think Musk would be way more leery of designing a bus which had to have a door for each row. But apparently he hasn't bothered to think it through at *all*. The utter ignorant nonsense regarding buses is actually the most disappointing thing; the rest of the Master Plan seems well thought out.

I think you are mis-visualizing the concept. In a tweet last night, Elon said the design is inspired by the California Custom VW Combi. Behold:

Also, they are not alone. Local Motors has been making headlines with their Olli concept for a while now:

 

[neroden]

I think you are mis-visualizing the concept. In a tweet last night, Elon said the design is inspired by the California Custom VW Combi. Behold:

Also, they are not alone. Local Motors has been making headlines with their Olli concept for a while now:

There is a reason these things are worthless for mass transportation. I'm not going to bother to go into detail; suffice it to say they aren't mass transportation. You can't fit 40 people in there, let alone the hundreds you can fit in a typical train. That is an incredibly inefficient use of space compared to a BUS WITH AN AISLE. Do the math, geez.

There is a whole history of doofuses trying things like this which failed. History is littered with them. They all failed because they do not provide the basic high-density transport which is valuable for *mass* transportation. If your area is low-density enough that you don't need to supply that sort of high-density mass transportation... people will just take cars or taxis.

 

[yesla]

Where the due diligence?

 

[yesla]

There is a reason these things are worthless for mass transportation. I'm not going to bother to go into detail; suffice it to say they aren't mass transportation. You can't fit 40 people in there, let alone the hundreds you can fit in a typical train. That is an incredibly inefficient use of space compared to a BUS WITH AN AISLE. Do the math, geez.

Well maybe just have more of these buses to shuttle people to their final destination instead of a clumsy bus bus that stops at bus stops.

I like this concept. The second one looks like a modern horseless carriage.