Short-Term TSLA Price Movements - 2016

[neroden]

Sorry, I'm not following your argument here.

That's totally reasonable. My argument is dependent on some weird assumptions which I spent some years developing.

Basically I believe that many many people will habitually overbuild their solar panels out of a form of conservatism. As a result, I think people will have "free" wasted electricity at midday. I am calculating the value of the battery for people who did that. I also expect that current-style net metering will slowly be eliminated... utilities will eventually refuse to credit noontime electricity generation towards nighttime usage (which is a reasonable thing to refuse to do). This is already the proposal in Maine, supported by the solar panel companies.

For people who underbuild their solar panels, yes, you have to add the electricity generation cost to the electricity storage cost.

Seems like you are saying, it will cost 8c to store each kwh into the battery, and then retrieve 90% of that later. Then, you compare that to cost of electricity from grid, which includes generation+distribution costs. The battery doesn't generate anything. You have to first produce (or purchase) electricity, then store that into the battery at 8c/kwh.

 

[Yggdrasill]

The question becomes did the primarily offer an exchange ratio (TSLA shares per SCTY) or a $$$ offer (with TSLA shares as the "currency")?

Hard to interpret this as anything other than a shares for shares exchange:

We are pleased to submit to you and the SolarCity board of directors a proposal to acquire all of the outstanding shares of common stock of SolarCity in exchange for Tesla common shares. Subject to completing due diligence, we propose an exchange ratio of 0.122x to 0.131x shares of Tesla common stock for each share of SolarCity common stock.

 

[winfield100]

Heh. This is not the sort of stock you short, if you know what you're doing. Shorting Peabody Coal and Arch Coal worked out pretty well if you got the timing right... Short the past. If I were a short-seller (I'm not because of the risk of "the market remaining irrational longer than you can remain solvent") I'd be heavily shorting ExxonMobil and Chevron, and I might do very well by doing so...

yes, will we get another hurricane "Gilbert" or "Wilma" in the Carribean that nails Louisiana/texas refineries? or a superstorm Sandy or typhoon Hyune

 

[neroden]

The question becomes did the primarily offer an exchange ratio (TSLA shares per SCTY) or a $$$ offer (with TSLA shares as the "currency")?

Yeah, OK. I think it's primarily an exchange ratio. But let's look at the scenario in which it's primarily a $$$ offer. On June 21 (when the offer was published), Tesla was trading at $219.61. So to the extent that TSLA rises above that, they *might* lower the exchange ratio offered. Using the TSLA closing price on June 21and the low end of the exchange ratio band values SCTY at $26.79, so if you got in below that, you're definitely getting a discount vs. TSLA. SCTY is barely trading above that.

...Actually this is the best explanation yet for the widening arbitrage gap. Some traders may think it's a $$$ offer, and not be willing to pay more than $26.79 or so. I'm pretty sure it's actually an exchange ratio offer, but I could be wrong.

This is a very solid explanation for the gap, because it's the sort of information analysis failure which is really common. Lots of traders will not bother to look past the headlines which give a dollar value and will not realize that it's really a share ratio offer.

 

[electracity]

How set in stone is the announced exchange band? If SCTY fundamentals weakened, for example, with a weak upcoming quarterly report, would TSLA be in a position to lower the stock exchange factor in its final offering?

Since Solarcity has managed to obscure long term profitability, they can probably make the ER O.K. for one quarter by lowering price and deferring optional expenses. So while their residential business model is probably unraveling, but they should be able to show one quarter that is not a complete disaster.

They certainly gamed this out before it was announced. So unless a major TSLA only owner wavers, it is a done deal. The large SCTY holders know better than to object. Almost all SCTY insiders, except Musk, sold stock in 2014 when the price peaked in the 60-80 range.

 

[winfield100]

That's totally reasonable. My argument is dependent on some weird assumptions which I spent some years developing.

Basically I believe that many many people will habitually overbuild their solar panels out of a form of conservatism.

if you drive around Bethesda, Maryland, USA area (moderately wealthy area) you can note PV panels going up, not just on south facing, but also east and west sides and even a few north facing sides! (use cosine of incident angle of sunlight). overbuilding, perhaps yes. look at black cube 800sqft built by german students from darmstadt(sp). 5 of 6 sides completely covered with 19kw PV (older tech) 150% of use with vehicle.

 

[Ulmo]

wk1: 3/5days, 36hrs
wk2: 4/5days, 48hrs
wk3: 3/5days, 36hrs
wk4: 4/5days, 48hrs
avg ~ 42hrs/wk

I love this setup, I want a 3-4 weekend days per week.

Right, so Wednesday would have double the workers, and Friday would have half the workers. Or, Wednesday is the skip day; MTu ThF for the 4 day, then MTuW and WThF for the 3 day.

But it does sound squishy, like it's only an approximation of what is going on, not a solid explanation. They are probably working all sorts of different shifts?

 

[MP3Mike]

Right, so Wednesday would have double the workers, and Friday would have half the workers. Or, Wednesday is the skip day; MTu ThF for the 4 day, then MTuW and WThF for the 3 day.

No, they probably run the factory 7 days a week.

 

[madodel]

definately a vote of confidence.

(btw, there is article on SA by a "lawyer" called Montanaskeptic using picture of model 3 'upskirt' (no battery) saying all is hoax, etc etc who 'lurks' somewhere here on TMC

nice action on TSLA so far today

How many billions do the oil companies have to lose before they stop paying the trolls to lie?

 

[austinEV]

At TMC connect and gf party later. I will tweet some updates. @bgotchall

 

[dirtyofries]

How many billions do the oil companies have to lose before they stop paying the trolls to lie?

Yeah, he and Spiegel like to bounce their tweets off each other.

These guys are some clueless loons. Having a model of the car doesn't make it fake. There are drivable versions in existence - I'm not sure how they can even post this garbage with a straight face.

 

[Ulmo]

Tesla's developing a case of "Not Invented Here" syndrome, so commonplace in tech companies constantly faced with build-or-buy decisions. Often they start out with buy, so they can get to market faster, but then their requirements, specs, plans, or egos outgrow what they bought from a third party, so they decide, time to build our own. Nothing wrong with that, until it gets out of hand.

Re: Mobile Eye: Israel is a way different time zone, even moreso than New Jersey and New York and so on (for collaboration). Also, first-hand testing of developments would take quite a ride from Israel to California. Putting it local would erase both those problems. I advocated it ever since I learned it was being done in Israel. I think it will have a huge help in a year or two once the builtin inefficiencies are broken down and new development efficiencies have started making it through the new pipelines.

 

[Ulmo]

Learn accounting?!

Most boring class I ever took! If it were possible to die of boredom I wouldn't have survived.

Mostly about which number goes in which box.

Most classes are fascinating. A boring class just means you had a horrible teacher.

 

[drinkerofkoolaid]

Is it possible Elon was able to turn the 1977 submarine lotus from the movie Goldfinger into a functioning Electric Vehicle that doubles as a submarine or boat?

The Bond 1977 Lotus Submarine Found in a Storage Unit, Now for Sale

Elon Musk buys James Bond's Lotus submarine, wants to install Tesla powerplant

Tesla's Model S can be used as a boat in a pinch

Imagine if Elon plans to sell a limited edition Tesla vehicle that doubles as a boat or submarine, for say $1million each.

 

[JeffreyY]

Is it possible Elon was able to turn the 1977 submarine lotus from the movie Goldfinger into a functioning Electric Vehicle that doubles as a submarine or boat?

The Bond 1977 Lotus Submarine Found in a Storage Unit, Now for Sale

Elon Musk buys James Bond's Lotus submarine, wants to install Tesla powerplant

Tesla's Model S can be used as a boat in a pinch

Imagine if Elon plans to sell a limited edition Tesla vehicle that doubles as a boat or submarine, for say $1million each.

I think Wet Nellie was in The Spy Who Loved Me

 

[tander]

Most classes are fascinating. A boring class just means you had a horrible teacher.

You're probably right, if Robin Williams taught cost accounting it would be a lot better.

 

[MitchJi]

So is this extra capital needed to take the Gigafactory from 50 GWh capacity to 150 GWh?

I believe that they plan to fund most or all of of the 50 GWh to 150 GWh portion of the GF with profits from the initial 50 GWh, in other words self fund

Passed through a bunch of superchargers yesterday, and was very pleased to note that both Mojave and Mammoth had Powerpacks installed. Didn't actually look at some of the others.

I think that blows up the speculation that Tesla isn't going to continue to produce both powerwalls and powerpacks.

 

[dc_h]

So is this extra capital needed to take the Gigafactory from 50 GWh capacity to 150 GWh?

I think if they had brought this online at the original pace, to support 500,000 cars in 2020, much of the financing would have been internal and cash flow from operations. Due to the accelerated pace, they are paying forward. This helps their early adapter position in both energy and transportation. This goes back to the value vs growth discussion (bears v bulls). Is it better to pay to speed up growth and sacrifice short term profits for growth. I think the answer is becoming more apparent to Panasonic and I think that will be very bullish for TSLA, as the market sees a more conservative partner being into TSLA's growth strategy.

 

[MitchJi]

Most classes are fascinating. A boring class just means you had a horrible teacher.

I only had a few excellent teachers in schools in my life.

Pretty hard IMO to make accounting fascinating.

 

[mmd]

hmmm, that does not compute:
3+4 = 7days, but Mon-Fri is only 5 days
there would have to be a Sat and Sun 6am-6pm shift too to get to 3+4 work days for the two shifts.

Good catch. But I think , he meant 12 hour day and night shifts.
Even that doesn't make a whole lot of sense. Mon 6 a.m. to Fri 6 p.m. is 4.5 full 24 hour periods = 108 hours = 9 12-hr shifts.
If they are doing 7 shifts total, it is 84 hours = 3.5 24-hour periods.

Surprised, nobody taking the tour clarified this. May be @MikeC made a mistake in quoting what was told.
(At the same time, read an analyst note claiming 50% downtime in Q2 at the Tesla factory. So hard to know what's the true utilization.)