Mitch, the way I see it is that initially institutional investors were surprised and had doubts about the merger. Elon talked with some of them, and they seemed to be won over. Thus, Elon's comment of him expecting a super-majority. But that was a while ago, and lots have changed... including TSLA lowering their offer price... and SCTY deteriorating financial position. The latest we've heard from Elon (a week ago) was that he was getting some serious flak about SCTY and that was causing stress (rough paraphrase). So, one explanation (sure there could be others, I know) is that some major institutional investors have turned negative on the deal and are putting pressure on TSLA to see if they can change Tesla's mind about it.
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Mitch, the way I see it is that initially institutional investors were surprised and had doubts about the merger. Elon talked with some of them, and they seemed to be won over. Thus, Elon's comment of him expecting a super-majority. But that was a while ago, and lots have changed... including TSLA lowering their offer price... and SCTY deteriorating financial position. The latest we've heard from Elon (a week ago) was that he was getting some serious flak about SCTY and that was causing stress (rough paraphrase). So, one explanation (sure there could be others, I know) is that some major institutional investors have turned negative on the deal and are putting pressure on TSLA to see if they can change Tesla's mind about it.
The case against TSLA shooting up like crazy for the next several quarters is Model S demand seems to have peaked or is close to peaking and Model X demand is weaker than expected. This means next year earnings reports might not be very as good as they need to be in order to sustain a large, continued rally in the stock price next year... that is until we start seeing significant Model 3 delivery numbers.
To adumbrate the point, a state of emergency has been reported by the governors of four states, Virginia, Tennessee, Alabama, and Georgia so far because of a gasoline pipe rupture. Covered, of course, by the local media but a left-leaning site reported no mainstream media coverage. I tried to confirm by Google search and a quick look showed the focus of the governors' urgency was the sudden spike in gas prices at independent stores (7-11, etc.) because of the requirement that refiners service wholesale customers first. No state of emergency, apparently, on environmental grounds.
I believe Bloomberg has given some coverage. I'll check NYT later. Sorry for OT post.
It is WAYYY too early to be making that determination.
TrendTrader007
Active Member
I know! I dunno any major fundamental reasons or catalysts except if TSLA energy takes off. However, fundamentals are preceded by technicals and to me technicals look really good. We're trading in a tight sideways range for the last 5 quarters now and this current quarterly candle is looking like a doji/ inverted hammer (I suspect it'll change for better in next 2 weeks). So how long does a stock like TSLA go sideways and nowhere fast? Indefinitely? I don't think so
Technically, I suspect the stock will make a strong breakout sooner than later and the fundamentals will justify the breakout
We'll see but if I am right then this is precisely the time to go super long TSLA since market prices in good news at least 6 months in advance
bottom line : in the stock market what everyone knows is not worth knowing
A successful speculator sees what is coming around the corner before it becomes news
MitchJi
Trying to learn kindness, patience & forgiveness
But I am sure that they plan to use the equipment and techniques used to build GF1 to build more GF's. They can now easily, quickly and cheaply GF's, much smaller than GF1 if smaller is advantageous in a given situation with similar production costs. A great way to do that IMO would be a JV with BMW, VW or Diamler. Something like the partner puts up the cash and TEsla gets the rights to buy 30 of the cells at cost.
1. Maybe he is sure the price won't drop that far.
2. It's better ($) and easier to do this now.
3. I hope that he feels some sense of responsibility to shareholders of both TSLA and SCTY. How would you feel if you purchased SCTY, largely due to your belief in Elon, and he deliberately allowed SCTY to tank so that TSLA could save a minor amount of dilution to make what he believes is a no-brainer acquistion?
Thanks! I'd forgotten he said that. I was saying the same thing.
The same huge institutional investors definitely made huge purchases of TSLA after the merger was proposed. I think that they also made similar purchases of SCTY.
Even if they only bought TSLA at that time (no SCTY) your premise that they don't believe in the merger is clearly flawed.
To me there are two main possibilities regarding effects of Model X ramp on Model 3:
1. Tesla learns from their mistakes, and does a much better job with Model 3.
2. Tesla doesn't learn from their mistakes, and Model 3 ramp has major issues like the X.
Now, I know we're on TMC and it's a fan club so anti-Tesla comments aren't appreciated, but I'm a Tesla fan and investor... so please don't take my comments as anti-Tesla. I'm trying to be constructive. That said...
I have my doubts as to if Tesla has really learned their lesson with Model X. Tesla/Elon points to hubris and the difficulty making the Model X as the main problem for the X issues, and they point to designing Model 3 with DFM (Design For Manufacturing) principles. I think that helps. But I don't think it hits the nail on the head.
In my opinion, I think the more important problem was that Tesla didn't do comprehensive enough testing on the Model X. They should have had 50+ Model X prototypes on the road, running all day in various instances in public and private places, and this should have gone on for at least 6 months prior to production. If they had done this, they would have caught all the major problems of the X and fixed them. The problem with the X, as I see it, is that they skimped on the testing. Tesla decided to "hide" the Model X from public and even when they showed the car, it seemed like they only have 4(?) prototypes. Even at the X reveal event at end of Q3 2015, one of the Model X FWDs wouldn't open and they had to remove it as a test drive vehicle. Even at the event, it was clear the FWDs had major issues. Perhaps it was because Tesla wanted to save money, but to have only 4 (again I'm speculating and could be wrong, but I'd like to see me proven wrong) test vehicles is crazy. And it's probably the main reason they didn't catch all the problems.
Yes, the Model 3 will be easier to manufacture. But they also have a much more aggressive ramp schedule with much larger volume goals. So, any problems will be magnified.
What I'm looking for is whether or not Tesla will show evidence that they have 50-100 test vehicles doing extensive and rigorous testing at least 6 months before production. If they do this, then I think Model 3 ramp will go great. If there's no evidence of this (and we still hear or see just a few to several prototypes in January 2017), then I'd be worried that Model 3 ramp will not only go slower than anticipated but also have more quality issues than expected.
And as a Tesla fan and investor, I'm hoping Tesla nails the Model 3 ramp.
Don't bother reading the book called The Seventh Sense by Joshua Cooper Ramo who tediously makes the same point about successful entrepreneurs. Unfortunately, he ads nothing I know to the literature of why they have this sense which I think Jobs, Bezos, and Musk exemplify. But what should one expect from a former associate at Kissinger Associates which has given us the likes of L. Paul Bremer?
To be fair, Bremer did have some problems as a more objective source than I noted:
The Former Head Of The US Occupation In Iraq Did 2 Very Embarrassing Things On His First And Last Days On The Job
Fundamentals can be preceded by technicals, but if technicals aren't supported by fundamentals than any rally likely won't be sustained over a long period of time (ie., several quarters).
If the Model X was a hit, I think we'd be at $350 right now and make $450 when Model 3 ships. If you look through my past posts, I was upset and public very early on with the Model X ramp issues because I knew it could really dampen the SP and make raising money more difficult. I could go on about why I think the X fiasco makes Tesla a much more vulnerable company, but I won't since I'll probably be misunderstood as anti-Tesla. Ironically though is that I care so much about this stuff, and at times I can be critical when it's called for because I care about Tesla so much and I want them to do well.
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Audi...Tell me at least you did not smile at the poster...C'mon.....Just a little?
the politically correct way to pull that cord
*Edit: Sorry could not help myself with the politically *neutral* poster.
If we have snippyville please feel free to move my post(s)
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Intelligence certainly requires information and it is often said wisdom is the proper use of knowledge. But what is smart? Sometimes I think a really good memory is often confused with being smart; I am often a victim of this delusion.
Smart is really defined by how quickly one changes one's mind when it is appropriate and is akin to what TrendTrader0007 said in the wonderful statement above. If Elon has learned the lesson of the Model X despite DaveT's worry, I think we will see that confirmed late next year. That Elon has admitted to hubris is a good sign. Of course there are others as well.
Whatever the definition I'm willing to call Elon Musk smart. Fortunately, few of the rest of us are so carefully scrutinized for daily confirmation. My wife tries, however, and is a great critic in the best sense.
Smart is really defined by how quickly one changes one's mind when it is appropriate and is akin to what TrendTrader0007 said in the wonderful statement above. If Elon has learned the lesson of the Model X despite DaveT's worry, I think we will see that confirmed late next year. That Elon has admitted to hubris is a good sign. Of course there are others as well.
Whatever the definition I'm willing to call Elon Musk smart. Fortunately, few of the rest of us are so carefully scrutinized for daily confirmation. My wife tries, however, and is a great critic in the best sense.
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[QUOTE="MitchJi, post: 1734442,
DaveT and Al, don't you think that if Elon's personal explaination convinced every institutional fund manager that if you had access to the same information that it would probably either change your mind or at the very least substantially reduce your opposition to the deal. Isn't it hubris to believe that your understanding is superior when you don't have complete access to all of the relevant information?[/QUOTE]
Mitch,
I can't speak for DaveT on this.
It is quite evident from my posts that I do not like the merger. To be more specific, the timing of the merger.
Certainly EM has lobbied/cajoled the institutional investors to vote 'yes' and that he has inside information on the financials (good and bad) on SCTY. That is why the 'trader' side of my portfolio has been adding SCTY with an average price of $17 and not adding to TSLA as an arbitrage trade.
Call it hubris, or anything else if you like, but EM is not infallible: Look at the X. I don't want to go down that rabbit hole (but will if you like as I am famous, OK, infamous on the TM forum, in my postings about the X ramp and QC issues) but suffice it to say that the hubris is not without some merit.
Evidence: EM went from proclaiming the 'X will be a better SUV than the S is a sedan' to 'we have learned that the production team and suppliers should be an integral part during the design phase for the 3 based on our experience with the X' ***I did put these in quotations even though they are a summary and not EM's exact words but catch the spirit of the remarks***
DaveT and Al, don't you think that if Elon's personal explaination convinced every institutional fund manager that if you had access to the same information that it would probably either change your mind or at the very least substantially reduce your opposition to the deal. Isn't it hubris to believe that your understanding is superior when you don't have complete access to all of the relevant information?[/QUOTE]
Mitch,
I can't speak for DaveT on this.
It is quite evident from my posts that I do not like the merger. To be more specific, the timing of the merger.
Certainly EM has lobbied/cajoled the institutional investors to vote 'yes' and that he has inside information on the financials (good and bad) on SCTY. That is why the 'trader' side of my portfolio has been adding SCTY with an average price of $17 and not adding to TSLA as an arbitrage trade.
Call it hubris, or anything else if you like, but EM is not infallible: Look at the X. I don't want to go down that rabbit hole (but will if you like as I am famous, OK, infamous on the TM forum, in my postings about the X ramp and QC issues) but suffice it to say that the hubris is not without some merit.
Evidence: EM went from proclaiming the 'X will be a better SUV than the S is a sedan' to 'we have learned that the production team and suppliers should be an integral part during the design phase for the 3 based on our experience with the X' ***I did put these in quotations even though they are a summary and not EM's exact words but catch the spirit of the remarks***
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Yes, the evidence is that there hasn't even been a full quarter of production since the ramp steadied and major issues were resolved. Model X is already ahead of where Model S was post-launch, and demand for Tesla cars is a feedback loop--more cars on the road, more people riding in their friends' relatives' coworkers' Model X, confidence QC issues are resolved = more demand.
So with all that in mind--definitely premature to say Model X demand is low. I wouldn't be surprised to see parity in S / X deliveries within the next 4 quarters.
MitchJi
Trying to learn kindness, patience & forgiveness
Agree!
Pllus IMO the reason that MX deliveries were about half of MS deliveries in Q2 is that they still hadn't resolved the production issue. I'm sure someone here will say it's a demand problem, but I don't believe that. One reason I'm optimistic about Q3 is that if they've finally nailed the MX production that should improve MS production as well.
Regarding points #2 and #3, I completely agree. My main hesitation w/the SCTY model is not the synergies created or the potential of TE. Rather, it's the added financial stress it can cause Tesla during a time when they are going to be financially stressed already with Model 3 ramp.
Regarding point #1, for me I look at the overall picture. I can be critical of how leadership executes certain parts of the company (ie., Model X), but overall happy with the future prospects of the company (ie., Model 3 potential and demand). Just because I'm critical of a certain part (ie., Model X ramp, or timing of SCTY merger), doesn't mean that I've "lost faith" in the TSLA leadership and should sell my shares. I could be super bullish on other parts of the company and feel the overall prospects of the company look very good. Or I could be slightly less bullish due to the SCTY merger, and trim my position (which I might do, but am undecided at the moment). But it doesn't mean I've lost complete faith in Elon and his team.
Based on what?
I mean it may be, but we haven't heard anything official from Tesla about X vs S demand yet and it seems production on X was still an issue in Q2 (only go resolved towards the end of the quarter), so how many X were delivered is not exactly a good metric either.
If I had to guess I would say the lack of bragging about X demand may be indicative and all that press about X production and quality issues surely didn't help, but it's a bit odd asking for evidence to the contrary when your own deduction is not based on facts either.
dennis
Model S Plaid
In addition to price, utilities are very concerned about the reliability and longevity of the battery systems they buy. Tesla experience with L-ion batteries and the reams of reliability data they have accumulated is a big competitive advantage. We shouldn't expect these deals to be won on price alone, and startups will be at a distinct disadvantage because of no track record.
Fair point. And I am not saying I was (am?) a 100% sold on this either, I mean the risks you raise are valid, but at some point thinking about this I was like: "ok, so I have this amount of information, which is infinitely less than what those guys have so it comes down to do I trust their judgement and integrity, or do I think they were blinded by personal interests and hubris"? I mean what else can we do but trust them or get the hell out of the stock? Even if we had the shares to influence the vote (i wish, hah!), as others pointed out, a "no" vote could do a lot more damage at this point.
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