Short-Term TSLA Price Movements - 2016

[electracity]

I have no science behind my conclusion/opinion. IMO, I never liked the SCTY business model...no charge product/leasing/becoming in essence, a utility company. I believe their business model would need to be changed or would fail. I know many feel they were a quarter or two away from turning a profit. Personally, I think they were a year away from potential failure. During the next 3-6 months I saw their value dropping dramatically. TM is overpaying (some would call it bailing out) for SCTY.

Now, TM is at a critical stage. They are trying to bridge the gap between bringing the supply/demand up for the S and X to help pay for the
model 3. So, what do they do....let us not only try to fund that but lets overpay for SCTY. I have said before that these decisions/timing are far above my pay grade but personally.....I think this is a *stupid* move.

I have been wrong before and this may turn out to be a brilliant move. I think it would be a good move...in late 2017. They could buy the Buffalo manufacturing facility for next to nothing and add it to TE.

Solarcity seemed to have a large payment due for factory equipment purchase. When they announced the delay at the Buffalo factory, the ability to finance the equipment seemed to be the issue. I think the Tesla upcoming cash need is probably to pay for solarcity's obligations.

The real master plan is probably :
1) Reveal an impressive AP 2.0, creating even greater interest in the model 3.
2 ) With the market feeling Tesla is way ahead with the model 3, more Tesla stores seems reasonable.
3) Many Tesla stores gives Tesla Energy has a unique retail channel for solar and storage.

So maybe the markets may be somewhat O.K. with Musk adding his 13,000 solar buddies to the payroll. But some ugly quarterly financials seem likely. Simply summing the P&L from both companies is ugly, and that isn't even including non-recurrent expenses incurred by the merger.

 

[neroden]

Here is my personal theory for the motivations of the merger:

1) Elon is personally annoyed at the separation. He is inconvenienced that they are not one thing and cannot just review the day-to-day or order something done. There is no reason that that barrier could not be overcome with various partnerships, but Elon didn't want to do that because it would mean getting stuff done through a slow formal process.

He said outright that this is the case. And cited the Kauai'i deal.

 

[RobStark]

1) Maybe if Hillary slaps a 1000% punitive import tax on all foreign produced panels.

2) At this point, the asset may be valuable but not productive. SolarCity has plenty of stuff on the books already of the former but it desperately needs the latter instead if it were to want to survive the crunch alone. Worse, the asset is anti-productive since it's been mainly a money sink up to this point.

1) SC panels don't need tariffs to be competitive but their are already 25%-52% countervailing duties on Chinese panels. US make SunPower panels are competitive and the Silevo panels will be cheaper and at least as efficient. There is no "magic" in Chinese solar panel manufacturing. The Chinese government has already begun pulling back subsidies to panel makers causing many to go bankrupt including the second largest.

2) Same nonsense is written everyday on Seeking Alpha about Tesla's Gigafactory.

 

[Oil4AsphaultOnly]

Got carried away with my rant. By picking up SCTY for pennies...not dollars....they would 'acquire' the rental agreement, and thus access to the plant, for pennies, not dollars.
IMO, that is SCTY's most valuable 'asset' to TE.

I'm just a lowly engineer, but I'm pretty sure any agreement is null and void unless BOTH parties agree to it. NY would be in a pretty good position at that point to say, "these are the new terms", since the equipment might be SCTY's, but the building is NY's.

 

[brian45011]

There was a 10k block of 255 Calls traded today. But the open interest was already 10710.
Two half blocks of that (5000 and 4700) volume spikes were traded on 8/18 for $2. The 255 today was at .52.

Who's to say they just didn't by to close their position and took the counterparty's $?

Look tomorrow to see what open interest is.
If it is only 710 or so - then the calls were bought-to-close, not bought looking for upside. Most likely a roll down to 235 Covered Calls by the large holder trying to make some money during the downswing. The 235 were traded in small blocks, the 255 was one trade.

235 Oct calls had open interest of 725 entering today, now with 11748 volume. That would be a roll-down to me. Looks like $2.10 is roughly their roll/sell point on these covered calls.

This is the kind of information that CNBC should be telling you. They didn't mention the open interest on both sides of the spread for this video blurb - only the trade volume of the 255s.

Excellent observation.

 

[austinEV]

He said outright that this is the case. And cited the Kauai'i deal.

Yes, I remember that. but it was phrased as an inefficiency of the *companies*. I think it was Elon *personally* inconvenienced. There isn't much difference, which is sort of my point.

 

[sdtslafan]

Musk Talked Merger With SolarCity CEO Before Tesla Stock Sale

Musk, Tesla’s chief executive officer and SolarCity’s chairman and largest shareholder, had the discussion with his cousin, SolarCity CEO Lyndon Rive, sometime before Feb. 29 when Tesla’s board was briefed on the idea, which it turned down at the time, according to a document filed Wednesday with the Securities and Exchange Commission.

That means that Musk and Tesla’s board had considered a merger with SolarCity before its May stock offering without disclosing it to potential buyers of the new shares.

It was considered but ultimately decided against at the time so it was immaterial.

 

[brian45011]

Very good question, given that their real boss is Andew Cuomo, who is quite unpredictable...

Would you be surprised if someone like SunPower offered to pick up the factory? Because I wouldn't be surprised.

Would you be surprised if -- following an SCTY bankruptcy -- the State Senate decided to take a dead loss on the factory rather than let Musk operate it? I would not be surprised; these guys can be viciously counterproductive sometimes.

Would you be surprised if I thought all politicians (federal, state, county, city and even POA officers) act in what they think is their personal best interest? The vast majority are more interested in lining their pockets while getting elected/re-elected than in any sense of public service or noblesse oblige.

(I prefer private banks )

 

[austinEV]

Awesome. I have long been a vocal critic of the prepaid model. Encourages bad behavior all around.

Also, this is day 5 of a string of down days. 3 and 5 day streaks tend to define moves, 6 day streaks are pretty rare.

Streak broken. Tomorrow is another problem.

 

[3Victoria]

@sdteslafan: "It was considered but ultimately decided against at the time so it was immaterial."

I agree, but others make hay out of it.

 

[Gerardf]

VW, Audi and Porsche all announing EV's on their roadmap almost weekly now.
But VW CEO has just stated they will not invest in their own battery factory.

VW-Chef Müller zur Batteriefertigung: So einen Blödsinn machen wir sicherlich nicht

They recently announced that in 2025 a very significant part of their sales will be EV's, but they do not want to control production and innovate on the most expensive component of these cars, while their ice / diesel knowledge will become obsolete.

They risk to end up being just an assemby house and brand name.

 

[vgrinshpun]

So, short sellers run out of ammo, at least at Fidelity. Here is the summary of the shares available for shorting throughout the day:

 

[Ulmo]

VW, Audi and Porsche [...]

They risk to end up being just an assemby house and brand name.

They and their customers might not mind.

Luckily, nor will Tesla customers.

 

[kenliles]

(I prefer private banks )

I guess you mean those who's pockets are lined with public funds;
in exchange for private lining of politician's pockets...
The difference seems....
minimal-

 

[brian45011]

I guess you mean those who's pockets are lined with public funds;
in exchange for private lining of politician's pockets...

No, I mean the small local ones you can sit down across the table from and a negotiate a mutually beneficial, bilateral agreement with, not the too-big-to-fail variety that are in cahoots with elitist, central planners who are convinced they have been anointed puppeteers to pull the strings of "everyday Americans."

 

[Papafox]

This is crossing traffic, isn't it? Video: Tesla Autopilot Saves Uber Driver From Crash

When MobilEye said the current system isn't designed for the detection of crossing traffic, they weren't saying that the system is incapable of detecting an object just because it is broadside to the Tesla's direction of travel. Rather, the implication is that the system is not yet optimized to deal with such objects. The radar beam, for example, shoots out at an angle that will register the rear end of a vehicle ahead, but it may pass beneath a semi-truck if that truck lies broadside to the Tesla and lacks downward extensions between the trailer's two wheels. Also, the system is analyzing the vehicle ahead for speed changes and has a great deal of focus on that vehicle. In contrast, some type of object passing left to right is likely not analyzed in detail that comes anywhere near to closely approximating the movement of the vehicle the Tesla is following.

With version 8.0 or 8.1 software, Tesla's radar will now provide the data for image analysis for objects in front of the Tesla, and those images can be used for collision avoidance, even in high-glare environments. Quite simply, the changes in autopilot are hugely important for preventing the type of accident that caused the uproar. We as shareholders should be impressed by the speed at which such a radical redesign of the system took place. What other company in the world has a CEO who understands the technical issues and can give the go-ahead or actually contribute to the solution development in such a quick fashion? Musk is sometimes criticized for his management style, but here is an example of why Tesla will continue to outdistance the competition in product development under his leadership.

 

[schonelucht]

1) SC panels don't need tariffs to be competitive but their are already 25%-52% countervailing duties on Chinese panels. US make SunPower panels are competitive and the Silevo panels will be cheaper and at least as efficient. There is no "magic" in Chinese solar panel manufacturing. The Chinese government has already begun pulling back subsidies to panel makers causing many to go bankrupt including the second largest.

2) Same nonsense is written everyday on Seeking Alpha about Tesla's Gigafactory.

1) You can't have it both way. If I can't know that there will be too little value added for the price, you can't know either that they'll be competitive.

2) Correct, neither the Buffalo plant nor the GF are productive at this time (well, the GF does a little production). Both need additional investments to start doing what they are being build for. Problem is that Solarcity has neither the cash nor the time to make those additional investments, Tesla has.

 

[racer26]

Can we not with the sensationalist articles Yahoo?

Tesla plans to raise funds this year to tackle cash crunch

 

[kenliles]

No, I mean the small local ones you can sit down across the table from and a negotiate a mutually beneficial, bilateral agreement with...

Ahh yes indeed. Like the song says:
Those Were The Days

 

[sub]

A year? More like 3 weeks. Their cash position at the end of the quarter was abysmal, they are not even able to sell a $125M debt at 6.5% for 18 months with a take-over deal by a well-funded company in the pocket except to insiders. They are not even getting a loan from those who have Tesla's inventory as a collateral. If not for Elon stepping in, they would be in breach of all sorts of debt convenants about now already. When that happens with this much liabilities on the books, it's game over. Those who think the timing of this deal is due to 'products' are deluding themselves. There are no products on the time line that require this close integration. Companies do and can work together very closely while keeping fully independent ownership (Panasonic and Tesla being a prime example). The reality is that the 'product lineup' of SolarCity is non-existent. Their original business plan was a hard sell on financially questionable deals to unsuspecting homeowners at a premium. Continued weakness and honest competition made that work for only a short while. Their own gigafactory is largely a paid-for-by-taxpayers extravaganza that will put out products for which the price premium will not reflect the added value. It's hopelessly postponed and manufacturing hiring promises to the state were instead filled with salespeople instead (seriously, solarcity boots are everywhere in the state). Now it's going to be 'beautiful' solar roofs, batteries and inverters. Basically all kinds of IP that comes from Tesla instead of Solarcity. Standalone they would be toast. Enough already.

Personally I didn't give a dime for SolarCity so I ignored it right up to the point where I couldn't because Tesla decided they needed to buy them. Since then I've been following the company and there is not a SINGLE shred of good news that came from the company. Not a single shred of good news. Financials went down even worse, product timelines more confusing, downsizing costs are looming, interest rates rising and capital markets closing willing to have to do less and less with the company.

Can you provide link to info you used to determine that SCTY could not sell the 125m to other investors? I know I never saw it. You can assume what you want, but you know what happens when you assume. The fact that Elon and company bought the bonds does not mean that others were not willing to. Maybe Elon demanded he get 1st place in line because it was a great deal and easy money knowing what he knows. That is far more likely than Elon buying them knowing that the whole show was going to be over soon.

I never had any interest in SCTY just to be clear, I've never owned a share. I do have the utmost confidence in Elon and friends however, SCTY will not take down TSLA long term, more likely to be an add. I'm currently leaking oil on my J17 TSLA Leaps too so the short term is painful for me.