Short-Term TSLA Price Movements - 2016

[Fallenone]

At this point, the divergence between SCTY and TSLA is so much no one dares to enter arbitrage anymore because everyone's fearing everyone else knows more. I suppose part of the problem is for a guaranteed profit, you need to buy SCTY and short TSLA. My guess is that the latter is what is keeping investors from going forward with it.

Interesting times even for being at the sidelines. First, if the squeeze happens, and then what's next? Who's going to blink and take profit? Who's going to make their shares available for lending again? Are there new/old shorts then stopping up to the plate to try to drive the stock back down again? Or will they be afraid to be hit by a GAAP-profitability (pre)announcement? Exciting!

I think the "guaranteed" profit would be long TSLA and short SCTY. If merger goes through, SCTY jumps 20% but your TSLA is hedged against this jump, so no risk here. If merger falls, TSLA jumps and SCTY file Chapter 11 and you get a lot of profit. If you long SCTY and short TSLA, if the merger goes through, you gain nothing; if not, you loss a lot.

Maybe this is the reason why there's a big difference in shares price. Long TSLA and short SCTY is almost a risk free trade.

 

[PaulRocket]

Due to the InsideEv numbers and the European delivery thread we can guess the Q3 numbers pretty accurately, however Asia remains a wild card. If heard a few rumors that the numbers for China look good but nothing concrete. Does anyone have any sources as to what the Asian delivery numbers for July and August could have been?

 

[phigment]

I think the "guaranteed" profit would be long TSLA and short SCTY. If merger goes through, SCTY jumps 20% but your TSLA is hedged against this jump, so no risk here. If merger falls, TSLA jumps and SCTY file Chapter 11 and you get a lot of profit. If you long SCTY and short TSLA, if the merger goes through, you gain nothing; if not, you loss a lot.

Maybe this is the reason why there's a big difference in shares price. Long TSLA and short SCTY is almost a risk free trade.

You really think that if the deal doesn't get approved that TSLA would go up? I have my doubts about that.

 

[schonelucht]

But he said he would not vote, so this will not happen.

He will not vote with his Tesla shares, but I believe he already said he will vote yes with his SolarCity shares! Isn't he also bound by all kinds of insider trading regulations that make this next to impossible?

 

[FredTMC]

Chances Tesla holds positive? Less than 10%. Yes, I am long but getting tired of the price action. The greater market will bounce from this mornings lows and instead of getting a tailwind we sell off. Pattern every time.

Yes. Macros suck today. Thanks Fed..

Still, TSLA has serious relative strength.

Certainly hoping the markets stabilize and not grind lower all day. Anything's possible...

 

[Fallenone]

You really think that if the deal doesn't get approved that TSLA would go up? I have my doubts about that.

Even if the deal falls and TSLA drops 20%, SCTY is mode likely to drop even more. Thus long TSLA and short SCTY will still end up with profit.

 

[stealthology]

It was a short.

Food for thought. Don't shoot the messenger.

Google this guy. Long time critic of Tesla. But more people might listen since he's a professor at NYU.

He will not vote with his Tesla shares, but I believe he already said he will vote yes with his SolarCity shares! Isn't he also bound by all kinds of insider trading regulations that make this next to impossible?

Source?

 

[Rarity]

Damodaran's valuation textbook is the standard valuation textbook.

The source re Musk's SCTY voting agreement is Tesla's draft S-4. See, e.g., page 133.

 

[BobSk]

Damodaran's valuation textbook is the standard valuation textbook.

The source re Musk's SCTY voting agreement is Tesla's draft S-4. See, e.g., page 133.

I have read all of Damodaran's past writings and watched his interviews regarding Tesla.

Here is my view: If companies can be valued like that using spreadsheet, then everyone would become a billionaire. Based on the Tesla example, I think the only part that is over valued is Damodaran himself. If he is so good, he would have issued a statement saying "I don't know how to value Tesla". Period.

 

[TMSE]

I think the "guaranteed" profit would be long TSLA and short SCTY. If merger goes through, SCTY jumps 20% but your TSLA is hedged against this jump, so no risk here. If merger falls, TSLA jumps and SCTY file Chapter 11 and you get a lot of profit. If you long SCTY and short TSLA, if the merger goes through, you gain nothing; if not, you loss a lot.

Maybe this is the reason why there's a big difference in shares price. Long TSLA and short SCTY is almost a risk free trade.

Makes no sense. If the deal goes through, which is the most likely outcome, both SCTY and TSLA will jump, but SCTY will jump higher than TSLA to close the arbitrage gap. Your trading strategy is almost guaranteed to lose money.

 

[FredTMC]

I still haven't found ANY evidence of any short seller complaining that their broker is forcing him to cover his short (i.e. Share recalls for SCTY voting)

If anyone has evidence, let us know

TSLA amazingly strong today. Only explanation is "share recalls"

 

[brantse]

Elon is really on the hunt for the "smoking gun".... WRT his latest tweet.

 

[electricity]

I still haven't found ANY evidence of any short seller complaining that their broker is forcing him to cover his short (i.e. Share recalls for SCTY voting)

If anyone has evidence, let us know

TSLA amazingly strong today. Only explanation is "share recalls"

tsla has acted like this many times. strong on downturns and super weak when everyone else rallies. it lives on its own little island

 

[FredTMC]

tsla has acted like this many times. strong on downturns and super weak when everyone else rallies. it lives on its own little island

Seriously, the #1 story today on this Short-term thread is SCTY related "share recall" for Voting.

Does anyone see evidence of shares being recalled by brokers?

So far, I've got nothing...

It's the only explanation I've got for TSLA strength today.

 

[Rarity]

Here is my view: If companies can be valued like that using spreadsheet, then everyone would become a billionaire. Based on the Tesla example, I think the only part that is over valued is Damodaran himself. If he is so good, he would have issued a statement saying "I don't know how to value Tesla". Period.

I just think it's impossible to value a high-growth company with any degree of confidence.

But the vast majority of companies aren't high growth.

 

[stealthology]

Rather funny. Axiom, who was short SCTY before the merger announcement, had this to say this morning:

Axiom analyst Gordon Johnson II contends that the Form S-4 filing jointly made by SolarCity (SCTY) and Tesla (TSLA) offers evidence that the electric carmaker failed to consider if any other solar companies offered more favorable synergies, which he thinks will make shareholders incrementally less inclined to vote yes for this deal before the current "cutoff date." The analyst, who sees a 50/50 chance of the deal closing, has a Sell rating and $7 price target on SolarCity shares, which closed yesterday down 3.4% at $17.44 - SCTY/TSLA at Axiom - thefly.com

JPMorgan yesterday:

We think the difficulty associated with identifying underlying value is part of why Sunrun (RUN), SolarCity (SCTY), and Vivint (VSLR) have not performed better as public equities. The decision to take SolarCity back into Tesla (TSLA) may or may not make sense from Tesla�s standpoint, but it makes great sense considering that SolarCity was building a stream of future cash flows that it wasn�t getting credit for in public markets. We think Sunrun and Vivint are in similar situations and we would not be surprised to see a similar outcome for either company. Our work suggests that both companies are significantly undervalued. more Solar @ JMP 9/8 fwiw (more)

 

[3Victoria]

Tesla is still in the lower part of its S growth curve ... as EM has commented it is very hard to predict there since small changes to the slope can result in large changes to time to linear portion. In addition, Tesla is not sitting on its laurels and is continously adding new projects with their own S curves making analysis very difficult. However the direction is clearly up absent some disaster.

 

[GoTslaGo]

Rather funny. Axiom, who was short SCTY before the merger announcement, had this to say yesterday:


JPMorgan yesterday:

Sooo, who to listen to? JPMorgan vs Axiom... (Now remind me, who's Axiom?)

 

[FredTMC]

Can someone post shares currently available to short with brokers?

Needs an update from this morning... Thanks in advance!

 

[aznt1217]

Man we can't catch a break today.