Short-Term TSLA Price Movements - 2016

[Intl Professor]

I'm wondering how insurance companies will react to the development of driver-less tech. Auto insurance is a big part of their business. I suspect they would fight the trend as hard as dealerships but may be more effectively since they are much more organized as a few big firms instead of small highly localized firms.

Haven't they welcomed safety features since they are saved money? Whether that savings is passed on to the consumer depends upon state regulation. The Consumer Financial Protection Bureau might anticipate this unless Trump wins. Certainly the Republican Congress is after it and/or trying to wrest its financing away from the Treasury Department.

Edit: Sorry I posted this before seeing insurance report above @winfield100.

 

[generalenthu]

The way I see it, its not AP2.0 Hardware that breaks the equation, but Tesla Network.

2.0 Hardware is an incremental improvement. Extra, but shrinking, hardware cost, added features to compensate. Presents way better value for money than a non-level 5 capable machine.

Tesla Network though, completely breaks the economics of car ownership. If I can just send my car out to make enough money to pay for it, the value proposition of how much I'm willing to spend on the car itself is completely different. If TN is lucrative enough for the vehicle owner, it makes the price tag of the car completely irrelevant. But then it runs into the fiduciary duty of Tesla to its shareholders, because at that point, the ROIC is so good that Tesla ought to stop selling the cars to the public and just own them itself. I have no idea how to predict what that looks like, and when the tipping point happens.

I think the solution would be along the lines of Tesla deploying a number of cars to meet the base level of demand and any additional demand during peak hours could be met with customer cars on the Tesla network. Similar approach for high density vs low density areas. The idea is to offset only a portion of the car payment, not to give the car and the barn away.

 

[racer26]

I think the solution would be along the lines of Tesla deploying a number of cars to meet the base level of demand and any additional demand during peak hours could be met with customer cars on the Tesla network. Similar approach for high density vs low density areas. The idea is to offset only a portion of the car payment, not to give the car and the barn away.

Thats the thing though... its not Tesla giving the car away. Tesla got paid for the car when it was bought, AND got paid for managing a rideshare system with it.

If Tesla wants people to buy into this thing, they'll have to make it cheap for passengers AND lucrative for owners. Because its an open market driven by supply and demand, it will settle out to the price that balances the two. Tesla can only influence that price by altering what percentage they keep for operating the system. If they take too much, either the passengers will balk at the price and stick with traditional taxi and public transit, or the owners will decide its not worth the wear and tear on their car for how little they're getting.

The thing is, if its good enough to make owners want to do it, then it will be lucrative. If its that lucrative, it produces a ROIC that makes it stupid for Tesla to continue selling cars to the owners when it can just own the cars and sell the rides.

 

[Ameliorate]

The thing is, if its good enough to make owners want to do it, then it will be lucrative. If its that lucrative, it produces a ROIC that makes it stupid for Tesla to continue selling cars to the owners when it can just own the cars and sell the rides.

Tesla would likely have a much easier time getting regulatory approval with hundreds of thousands of people backing autonomous driving as opposed to trying to go it on their own and sucking up all the profits. People would likely just use whatever transportation service is available and not be emotionally tied to Tesla. The buyers/owners I suspect are the main front of Tesla's (non existent?) advertising campaign.

Doesn't really matter, I think we know which path Tesla is going down. I'm sure the M3 deposits have gone a long ways in making the M3 a reality, just like the M3 proceeds will make trucks, semi's and buses a reality. Now it just comes down to how lucrative Tesla fleet is for the owner and for Tesla, and at what cut is it worth it or not for an owner to join the fleet. Its all good in my opinion

 

[BobSk]

The 10-bagger part has already happened with TSLA from between the IPO and now.

Because the 10-bagger part already happened, it makes this stock even more dangerous for some shorts. After seeing the first 10 fold, they think it's safe to stay short, tend to become "short and hold", "short more when the stock rallies."

Seems to me the next 20 fold is about to start within a few months. However many shorts are so sure the upside is limited. They keep thinking "GM sells more car in a week than Tesla in a year; EV is just a niche market; the competition from big boys is coming around the conner; Tesla loses money selling $100,000 cars, it will lose more money selling $40,000 cars."

In reality, I think the bad case scenario for Tesla is to sell the company to Google. Down side is limited. But there is a very high chance the company starts to make money from the Tesla network division. It's like Uber but with distinct advantage against any other ride sharing or taxi companies. This division could generate $4B profit the first year the service starts. When that happens, suddenly the master plan part 2 seems real. Tesla doesn't need to raise cash anymore, instead they will start to buy back shares.

In the past few years, Tesla's stock has been range bound. Shorts view that as a good sign for their position. I think what happened is the weak longs got washed out. The underlying business progressed tremendously. More and more long holders understand what's likely to happen to Tesla's stock. Remember the T. Rowe Price manger said "I love everything about Tesla......"? Shorts helped to depress TSLA's price, while bulls slowly increased their holdings.

It's not a good situation for shorts if they understand what's going on.

 

[stealthology]

For next week's ER, does anyone see any potential wild cards (positive or negative)...

Without a doubt, the capital raise for M3 will come up. How do you all expect this topic to be handled by Musk & Wheeler?

 

[Papafox]

During events over the next few weeks, Elon wants to provide enough positive information so that the stock price runs up enough to make an equity raise attractive. He wants to close the deal on SCTY, raise the funds, and then take financial concerns for both Tesla and SolarCity off his plate so that he can spend more of his time on other aspects of his businesses.

To raise the stock price, he will get the best reaction from investors by demonstrating that the combined TSLA/SCTY has been de-risked significantly below current expectations. The Autopilot 2.0 hardware announcement may indeed foreshadow amazing profit-potential ahead, but investors already know that Telsa has incredible profit potential ahead. They're mostly concerned about getting Model 3 launched on time from a company that has a suitable amount of money in the bank.

Wednesday's ER should help significantly with showing a de-risking if Musk can show better-than-expected profitability and cash flow positive. Friday's solar demo can also show de-risking if it includes mention that Tesla would move away from short-term financed PPAs to owner-financed solar roofs. The Nov 1 presentation could do the most at explaining how SCTY is not a threat to Tesla shareholders, it's a cash-creator when needed that is moving quickly from a risky business model to something that will keep the solar city employees profitably engaged while supporting TE, without involving the borrowing of large sums of money

Here's another benefit of the schedule. I suspect the usual suspects will launch FUD after the ER. Elon will have an event two nights later to address some of that FUD and another event less than a week after the ER to do the same. It looks like he has moved his chess pieces into good position on the board. I'm very much looking forward to seeing this game played out.

 

[madodel]

Because the 10-bagger part already happened, it makes this stock even more dangerous for some shorts. After seeing the first 10 fold, they think it's safe to stay short, tend to become "short and hold", "short more when the stock rallies."

Seems to me the next 20 fold is about to start within a few months. However many shorts are so sure the upside is limited. They keep thinking "GM sells more car in a week than Tesla in a year; EV is just a niche market; the competition from big boys is coming around the conner; Tesla loses money selling $100,000 cars, it will lose more money selling $40,000 cars."

In reality, I think the bad case scenario for Tesla is to sell the company to Google. Down side is limited. But there is a very high chance the company starts to make money from the Tesla network division. It's like Uber but with distinct advantage against any other ride sharing or taxi companies. This division could generate $4B profit the first year the service starts. When that happens, suddenly the master plan part 2 seems real. Tesla doesn't need to raise cash anymore, instead they will start to buy back shares.

In the past few years, Tesla's stock has been range bound. Shorts view that as a good sign for their position. I think what happened is the weak longs got washed out. The underlying business progressed tremendously. More and more long holders understand what's likely to happen to Tesla's stock. Remember the T. Rowe Price manger said "I love everything about Tesla......"? Shorts helped to depress TSLA's price, while bulls slowly increased their holdings.

It's not a good situation for shorts if they understand what's going on.

If they grasped what the future holds they would not be short. They can manipulate the SP for a while but eventually the future will arrive and we will see TSLA go up. Then the question everyone will obsess about is when the SP splits because it is too expensive for most to own. And we will see endless battles here as to why splits are absolutely terrible and will destroy TSLA and others saying why splits are the only way to grow SP.

 

[CatB]

Only to a degree. Most vehicles are in use at the same times each day, going to and from work. Self driving cars don't solve that problem.

Thank you - that's what I'm thinking. Rush hour is the problem.
In DC, we have sluglines. Slug-Lines.com - Slugging and Slug Lines Information For Washington DC
If Tesla can (no-brainer, imo) solve the carpool issue at the micro-level (versus batching up slugs at large park'n'ride lots), so that you get picked up nearer home and dropped off nearer your office - THAT would be sustainable transport.

 

[Stretch2727]

Interesting. The Nov 1 $0.23 gas tax increase in NJ guarantees a fixed $$ revenue each year.

So if the tax increase drives conservation or people to buy more fuel efficient vehicles the tax per gallon will increase each year.

Could be a death spiral especially if the price of oil goes up dramatically.

N.J. Republican lawmakers push for repeal of 23-cent gas tax hike

 

[techmaven]

Wow, I took a look to see what is being discussed wrt TSLA on Seeking Alpha... wow. Hmm. It's gotten worse over there. Complete delusion. It's not even worth correcting at this point, I'll just be happy when their bank accounts get emptied.

 

[GoTslaGo]

Wow, I took a look to see what is being discussed wrt TSLA on Seeking Alpha... wow. Hmm. It's gotten worse over there. Complete delusion. It's not even worth correcting at this point, I'll just be happy when their bank accounts get emptied.

I'll take your word for it. I refuse to give them a penny...

 

[EinSV]

Without a doubt, the capital raise for M3 will come up. How do you all expect this topic to be handled by Musk & Wheeler?

This is a great question. I expect we'll get a high level answer on the ER call that is something along the lines of we won't need one in Q4 and probably won't need one in Q1 2017, but it depends on where we are with TE ramp etc. ....

I think it is likely we'll get more details in the SCTY/TSLA financial presentation.

 

[stealthology]

IMO: (would love to be wrong) I think Tesla still plans to raise some capital in Q4 once the TNT of the upcoming 11 days force price above 215. Musk is good with words, he said he doesn't 'need' to raise now. Tooling and such is expensive, is it not?

Decent analysts won't be able to keep shut anymore. I suspect Adam Jonas doesn't perma-hate Tesla even after the SCTY announcement pissed him off and made him look bad.

 

[CarlitoDoc]

My guess....185 by the end of the year.....or lower.

 

[techmaven]

My guess....185 by the end of the year.....or lower.

On what basis? Are you investing accordingly or just hoping for a better entry point?

 

[CarlitoDoc]

the latter.

 

[Navin]

Ok. And looking for at least 20 likes/loves.

Here is the ultimate sign of a bottom and great things to come for Elon and Tesla. He literally just finalized his second divorce - perfect timing before the tsunami of hurt starts for the shorts.
Elon Musk finalizes his second divorce from his on-again-off-again wife | Daily Mail Online

 

[RobStark]

Elon Musk finalizes his second divorce from his on-again-off-again wife | Daily Mail Online

 

[racer26]

Thank you - that's what I'm thinking. Rush hour is the problem.
In DC, we have sluglines. Slug-Lines.com - Slugging and Slug Lines Information For Washington DC
If Tesla can (no-brainer, imo) solve the carpool issue at the micro-level (versus batching up slugs at large park'n'ride lots), so that you get picked up nearer home and dropped off nearer your office - THAT would be sustainable transport.

You mean like... Minibuses that can easily run sensible carpools without being handcuffed to a route?