Short-Term TSLA Price Movements - 2016

[vgrinshpun]

Wonder if this will scare some more shorts today :

"The Tesla bears are feeling the heat."
Tesla’s Short Sellers Are Paying Through the Nose

So on last Tuesday there were 3mm shares recalled, and then, per the WSJ account of data provided by Ihor Dusaniwsky, head of research at S3 Partners, another 2.4mm in the following week. So the total recalled shares since last Tuesday were 5.4mm.

Also, according to the article, big institutions do recall their TSLA shares. As I suggested before, there seem to be a waiting game going on, with the fees paid by those holding short positions going above and beyond all expectations. I bet that this test short seller's resolve, as they need to be convinced that shares will go down to be paying these astronomical fees. So far there are no signs of them giving up. The thing is that if Tesla pushes record date a week or two, it could test short seller's resolve further, because of the additional interest they need to pay, and because the record date could be pushed to be after the Q3 deliveries announcement (and possibly financial results pre-announcement a la 2013 Q1).

Looks like a bluff game. Both sides convinced that other side is bluffing. The thing is that only one side is right...

 

[AlMc]

Ummm. Ok I guess

Just so long as everyone understands that tesla already has a CFO

Tesla (TSLA) Taps SunPower's Branderiz as VP of Accounting

My read on this hire is two fold. Get someone in that knows what they are doing not only for TM but to show WS/possible merger voters that they have someone knowledgeable about accounting in the solar sector. Second, it sends a message to the current financial team at Solar City that they will not be retained. This is also good for WS/merger voters as it may have a mitigating affect on the worries by some, like me, that believe SCTY is on the verge of financial collapse (rightly or wrongly) and therefor needs a change in corporate governance.

 

[NOLA_Mike]

You've really got to "believe" to be short TSLA right now:

107.12% APR

EDIT: Data from Interactive Brokers

 

[Gerardf]

So on last Tuesday there were 3mm shares recalled, and then, per the WSJ account of data provided by Ihor Dusaniwsky, head of research at S3 Partners, another 2.4mm in the following week. So the total recalled shares since last Tuesday were 5.4mm. "

Accoording to nasdaq.com the TOTAL volumes this week were :

09/22/2016 2,381,600
09/21/2016 2,631,285
09/20/2016 2,408,556
09/19/2016 2,298,318

Note that this weeks volume was much LOWER than usual volumes. As example this month .

09/16/2016 3,104,266
09/15/2016 3,082,942
09/14/2016 2,256,143
09/13/2016 3,583,140
09/12/2016 3,714,049
09/09/2016 3,753,734
09/08/2016 3,372,293
09/07/2016 3,637,918
09/06/2016 4,386,193
09/02/2016 5,970,154
09/01/2016 7,932,444

Source : Tesla Motors, Inc. Common Stock (TSLA) Historical Prices & Data - NASDAQ.com[/QUOTE]

 

[vgrinshpun]

Zero shares available for shorting at Fidelity, estimated annual interest rate is 25%.

Monitoring of the interest rate is IMO currently very important, as in case the record date is not announced publicly, sudden drop in interest rate to low single digits might indicate that record date had passed and shares become available again. Depending on timing, this might be a predictor of imminent powerful downward pressure on SP.

 

[vgrinshpun]

Accoording to nasdaq.com the TOTAL volumes this week were :

09/22/2016 2,381,600
09/21/2016 2,631,285
09/20/2016 2,408,556
09/19/2016 2,298,318

Note that this weeks volume was much LOWER than usual volumes. As example this month .

09/16/2016 3,104,266
09/15/2016 3,082,942
09/14/2016 2,256,143
09/13/2016 3,583,140
09/12/2016 3,714,049
09/09/2016 3,753,734
09/08/2016 3,372,293
09/07/2016 3,637,918
09/06/2016 4,386,193
09/02/2016 5,970,154
09/01/2016 7,932,444

Source : Tesla Motors, Inc. Common Stock (TSLA) Historical Prices & Data - NASDAQ.com

Yes, I was looking at this as well, and it is puzzling that we did not see a significant SP move up and larger volume. The thing to keep in mind, though, that we have no way of telling whether recalled shares were actually covered, or whether short sellers are in default on significant numbers of recalled shares.

According to the M&A research articles I read, there is usually an increased activity before the record dates, which is obviously not so, at least so far, with TSLA trading. It seems that there is a lot going on under the surface. I think that it might burst out in the coming days/weeks, depending on the record date.

 

[Drax7]

That's most likely what happened. When I sort them by discounts, I see the ones with big discounts are still around. The ones removed were mostly with no discount. Doubt they got snapped so quickly.
Tesla has a funny way to show its inventory, a small fraction at a time. Now you see them, now you don't.

Tesla manufactures 400 cars per day, implying they must sell roughly the same amount per day.
Not surprised to see new the inventory drop sharply overnight.

 

[Gerardf]

One trader’s plan to make $12.6 million by betting on Tesla

"On Thursday morning, while Tesla was trading around $204, one trader appeared to spend $1.3 million on a bet that the stock would rally 15 percent in a month's time. And while the risk is defined at the amount spent, the trader could score a windfall of $12.6 million should Tesla see a big rally in the month ahead."

"It looks like a really smart way to play Tesla to the upside," commented Dennis Davitt, a portfolio manager at Harvest Volatility Management.

The high expectations for the stock, as well as the short time frame, makes this play "very optimistic," but with a potential profit of nearly 1,000 percent, "the payout is really good," Davitt said Thursday on CNBC's "Trading Nation."

 

[schonelucht]

Yes, I was looking at this as well, and it is puzzling that we did not see a significant SP move up and larger volume. The thing to keep in mind, though, that we have no way of telling whether recalled shares were actually covered, or whether short sellers are in default on significant numbers of recalled shares.

So we would then be looking at potentially millions of shares that the shorts failed to deliver within 3 days. Why wouldn't the brokers not make an effort to settle the accounts by buying on the open market?

 

[Tslynk67]

Robert Carter says no problem, Toyota can just add a third hydrogen tank next month.

Toyota iterates quickly.

Yeah and good luck filling it up!

Regarding CPO/inventory cars - I see we're down to just 6 here in Belgium - was about 20 when I checked a few days back.

 

[pGo]

Accoording to nasdaq.com the TOTAL volumes this week were :

09/22/2016 2,381,600
09/21/2016 2,631,285
09/20/2016 2,408,556
09/19/2016 2,298,318

Note that this weeks volume was much LOWER than usual volumes. As example this month .

09/16/2016 3,104,266
09/15/2016 3,082,942
09/14/2016 2,256,143
09/13/2016 3,583,140
09/12/2016 3,714,049
09/09/2016 3,753,734
09/08/2016 3,372,293
09/07/2016 3,637,918
09/06/2016 4,386,193
09/02/2016 5,970,154
09/01/2016 7,932,444

Source : Tesla Motors, Inc. Common Stock (TSLA) Historical Prices & Data - NASDAQ.com

[/QUOTE]
What is troubling is that even though the rates are high, volume has not gone high suggests there has not been much covering. Instead, a large holder may be trimming position at a steady state releasing any buying pressure.

Delivery news are well known but troubling part again is there is no anticipation of a run up.

 

[GBleck]

This is an indication that BMW is way behind Tesla on pack costs. Tesla doesn't believe that reusing packs makes economic sense.

BMW and Bosch open new 2.8 MWh energy storage facility built from batteries from over 100 electric cars

Doesn't have to make economic sense. It is an experimental project and adds to brand eco credibility.

 

[CALGARYARSENAL]

Is today the day when we begin the ascent? TWTR mojo......

 

[austinEV]

Doesn't have to make economic sense. It is an experimental project and adds to brand eco credibility.

Can someone explain why using recycled packs for energy storage "doesn't make economic sense"? I know JB/Elon have said it but I don't understand it from them either. It costs money to recycle and reuse the battery materials. It costs virtually nothing to just plug them into a sort of rack system designed for that. You can imagine, inside the GF, a big rack in the air conditioned interior where they just hook up the power and coolant loops. Who cares if the capacity is 80%, or 60 or 20% for that matter? Presumably they plan to use their own product in the Fremont and Sparks factories. What more cost effective solution than recycled materials?

 

[mrdoubleb]

My read on this hire is two fold. Get someone in that knows what they are doing not only for TM but to show WS/possible merger voters that they have someone knowledgeable about accounting in the solar sector. Second, it sends a message to the current financial team at Solar City that they will not be retained. This is also good for WS/merger voters as it may have a mitigating affect on the worries by some, like me, that believe SCTY is on the verge of financial collapse (rightly or wrongly) and therefor needs a change in corporate governance.

Agreed. Also, this will be an impartial outsider taking a deep dive into SCTY accounting, so there is less room to sweep things under the rug. The Tesla board can have a clearer picture on the health of that business and if any action needs to be taken.

 

[NOLA_Mike]

$SCTY - encouraging - dare I say the market is slowly coming around to believe that the merger may actually happen?

EDIT: Or, share recall is hitting it too

 

[Papafox]

So on last Tuesday there were 3mm shares recalled, and then, per the WSJ account of data provided by Ihor Dusaniwsky, head of research at S3 Partners, another 2.4mm in the following week. So the total recalled shares since last Tuesday were 5.4mm.

Also, according to the article, big institutions do recall their TSLA shares. As I suggested before, there seem to be a waiting game going on, with the fees paid by those holding short positions going above and beyond all expectations. I bet that this test short seller's resolve, as they need to be convinced that shares will go down to be paying these astronomical fees. So far there are no signs of them giving up. The thing is that if Tesla pushes record date a week or two, it could test short seller's resolve further, because of the additional interest they need to pay, and because the record date could be pushed to be after the Q3 deliveries announcement (and possibly financial results pre-announcement a la 2013 Q1).

Looks like a bluff game. Both sides convinced that other side is bluffing. The thing is that only one side is right...

Let's see if I understand this correctly, because it's an issue that could hugely influencing the next few days of trading. A total of 5.4 million shares of TSLA have been recalled in the past two weeks, but volume and SP strongly suggest that the shorts have not delivered all those shares. Many are likely waiting for the recall date to be announced, which could open the floodgates of new TSLA shares available to short, would result in a drop in price to TSLA, and would allow the shorts who have failed to deliver their shares to deliver less expensively. If Tesla does not announce the record day right away, those shorts who need to deliver shares get pressured into buying shares to cover, which would move TSLA up.

On the other hand, Tesla has inspiration to announce the record date soon, so that the ballots can be prepared and mailed. If Musk feels he has the votes to pass the SCTY merger question, he doesn't want to delay very long. With Electrek.co reporting that it believes the vote will be completed before Tesla's October 28 presentation, time is getting short.

The plot thickens because if shorts are not delivering the recalled shares, Tesla has a reason to delay the announcement of the recall date because the votes Musk is looking for may require that those shares be recalled and voted and the recall of the shares would give a nice boost to the SP in the short run. The stock price is important because it will influence the SCTY merger vote. If shorts do not deliver the required shares before Tesla announces the record date, then we see a drop in the SP (because some shares have indeed been recalled and would return to the wild) without first realizing the rise in the SP that the recall of all those shares would have brought.

So, the worse case scenario is that Tesla announces the recall date soon, shorts pile back in and we see a short-term drop in the SP. The best case scenario is that Tesla holds off announcing the record date, forcing the shorts to cover, which bids the SP up, perhaps a lot. Tesla doesn't announce the record date until the SP is rising rapidly, especially if the announced date happens after stunning Q3 delivery numbers are announced, and if this good news precedes the record date announcement, the availability of shares to short might be inconsequential because potential short sellers would not be inclined to jump in when the SP is rising rapidly on good news.

 

[esk8mw]

I'd now put the chance at the SCTY/TSLA merger not happening at less than 5% (I was at about 15% a week ago). Consider the evidence:

- Elon saying that institutional investors are on board
- Unveiling an integrated TSLA/SCTY product in late October
- Hiring a Controller from SunPower, with solar experience

Elon is not afraid to signal the markets. Consider the amount of egg he would have on his face if the merger did not materialize after all this. He knows this thing is locked up.

I've mentioned my experience with conducting institutional shareholder outreach with a large public company. I'll expand a bit more. Basically, these voting levels can be predicted with a high level of confidence after talking to the major institutions. The institution will not directly tell you how they are going to vote when you talk to them, but you can pretty easily predict based on tone and the questions they ask you during the call. As I'm sure you all know, the institutions control the game here, especially in TSLA. Retail holds almost 0 sway over this vote.

Also, companies hire proxy solicitor firms like Georgeson that can predict how a firm will vote, even if there's no contact between the Company and that institution (it's often hard to schedule calls with institutions and many will decline to speak with you). I'm not 100% clear on how they do this aside from looking at precedent and perhaps consulting "sources" but they are quite accurate. They give you daily estimates on where they think the vote is trending and how they think each institution will vote.

I'll put it this way. When I conducted outreach for this company, together with the proxy solicitor, I predicted the voting percentage to within 2% of the actual results. And this is a company with a much bigger retail presence and a vote that wasn't all that critical like M&A (so a bunch of institutions didn't return our call and those that did didn't have super strong opinions about the matter).

Nothing is guaranteed but I feel good about this one.

 

[vgrinshpun]

I'd now put the chance at the SCTY/TSLA merger not happening at less than 5% (I was at about 15% a week ago). Consider the evidence:

- Elon saying that institutional investors are on board
- Unveiling an integrated TSLA/SCTY product in late October
- Hiring a Controller from SunPower, with solar experience

Elon is not afraid to signal the markets. Consider the amount of egg he would have on his face if the merger did not materialize after all this. He knows this thing is locked up.

According to the latest 8-K, his base salary was set at $300K/year, and he was granted $5mm worth of restricted stock options. This is pretty high profile hire.

I think you are spot on. There is strong circumstantial evidence that Tesla is pretty sure that the acquisition will go through.

 

[esk8mw]

According to the latest 8-K, his base salary was set at $300K/year, and he was granted $5mm worth of restricted stock options. This is pretty high profile hire.

I think you are spot on. There is strong circumstantial evidence that Tesla is pretty sure that the acquisition will go through.

Right. A car company wouldn't have much use for a specialized solar company accountant, unless it will soon be a car and solar company. As you said, there's now serious money backing the suggestion that the merger is locked up. It says quite a lot.