Short-Term TSLA Price Movements - 2016

[dandurston]

Assuming Tesla doesn't slash prices on inventory vehicles every quarter, why would Q4 be better than/equal to Q3?

Positive things happening in Q4 that should offset the ZEV credits include:
- 100 kWh cars (higher relative and absolute margins)
- AP2 cars (higher margin)
- Continue to lower cost of goods as they get better deals on parts
- Tesla Energy might toss in a few million in profit.

 

[sundaymorning]

Analysts' job is to research and provide insight and analysis that comes close to what actually happens. This research is used to make sense of data for investment and investors. Mic drop indicates analyst ball drop...

Yep, a few analyst dropped the ball big time. If I was an owner of a firm, I'd look into firing some of these nitwits whose mistakes are costing investors millions... if I was an investor, I'd be looking to devest my money from such incompetent firms whose analysts are handling my money.

Honestly, I trust analysts here on this board more so than those on Wall Street.

 

[brian45011]

No I think he was just making the point that for each car GM makes they get three credits that allow them to avoid paying $15,000 in penalties for selling mostly gas guzzling ICEs. While Tesla gets 3 credits that are of no value directly to Tesla, but for which they can only sell them for $2,500 because of the ZEV rules.

Wasn't that the point of the ZEV regulations?? to induce all manufacturers who sell cars in California to produce more low/no emission vehicles and sell less (if any) ICE cars? What does Elon thinks CARB should do to achieve their objective of less tail pipe emissions within the state?

 

[tander]

I don't think so. 29.4% GAAP gross margin includes $139 million in ZEV credits. This probably won't be repeated in Q4. I think we're probably looking at something like 28-29% for Q4.

Assuming Tesla doesn't slash prices on inventory vehicles every quarter, why would Q4 be better than/equal to Q3?

100D is well north of 100k. And battery sales. And more cars delivered.

 

[tander]

He gets less than 10 likes per tweet and has around 1600 followers.
This guy is NOTHING. Don't feed the bears. Pay him no attention.

I think we should all chip in and send him ten buck each to help ease the pain of finally realizing is loss. TSLA is a great stock for shorting, but not in the long-term.

 

[tander]

Was it just me, or did Adam seem dejected? I expected a victory lap acknowledging Tesla Network. What gives?

My take was he was putting the ball on the tee for Elon to whack. Maybe I should re-listen to it.

 

[tander]

Btw, amazing and fantastic quarter. However, no TSLA earnings will ever beat Q1 2013.

Edit: not in terms of actual profit but in terms of significance, as back then Tesla was at the brink.

Hard to imagine a situation where that could happen again for TSLA. Although SCTY is sort in the same position as TSLA 2013 IMO, we'll find out soon enough

 

[NicoV]

TSLA Revenues increase 145 % YOY and EPS 153% this is HUGE
accelerating EPS and Revs are the major reason why a growth stock outperforms
Elon Musk is a super great CEO
i expect nothing less than stellar outperformance from this stock relative to the market over the next several years
any investor with any sense will buy as much TSLA stock as possible and hold it for the real long term
TSLA is the next AAPL and simply the single best stock to own
i stay super long forever

It doesn't hurt that we've apparently passed 'peak Apple', and a lot of Apple investors will look for the next Apple. I expect a huge influx of Apple investor money into TSLA.

 

[Turing]

Btw, amazing and fantastic quarter. However, no TSLA earnings will ever beat Q1 2013.

Edit: not in terms of actual profit but in terms of significance, as back then Tesla was at the brink.

Except not really, Elon had already worked out a impressive acquisition deal with his buddy Larry Page to keep him in control and give him access to billions in google cash.

 

[Papafox]

Congratulations TMC investor thread members, your analysis and estimates for Q3 beat the pants off anything provided by The Wall Street Journal, Fortune, Los Angeles Times, or CNBC. The rare journalists with quality reporting included Fred Lambert at Electrek.co and Daniel Sparks of Motley Fool.

I believe the games have just begun. TSLA is higher than it was this morning, but how high will it be ten days from now? Maybe the technical people can chime in and give us a SP above which TSLA is likely to move noticeably higher if it reaches that mark. Around the time of the deliveries report, that price was in the $215-217 range. Maybe it's still close to that. Expect the shorts to try the same old tricks to cap the run-up and keep it below technically-significant numbers. To combat such a strategy, we need a fair sampling of the holders of 28 million shorted shares to get uncomfortable enough to In-line edit by Mod:sell buy back when they see TSLA climbing, and we need enough longs to help accelerate that run-up through buying. The true believers are short on dry powder these days, so we need some fresh longs to join in. A shift in the news cycle from Telsa-bashing to reporting positive Tesla stories will help draw new longs into the stock, and Elon's schedule of frequent events over the next two weeks will positively influence the news cycle. To bring more buying by the big institutions, we need either a breakout or we need the SCTY vote to complete and the deal to go through so that the big institutional investors finally get off the fence.

This ER by itself might not decimate the efforts of shorts to manage the stock price within boundaries, but maybe the excellent ER plus the prospects of a Friday solar show plus Nov 1 SCTY financial discussion plus the likelihood of an excellent 4th quarter plus Model 3 on schedule will get enough shorts nervous to make a fast exit for the door.

What does it look like when the shorts lose the ability to manipulate like they've done in the past? You see efforts to hold the SP at numbers like 214 fail after a while and the SP blast significantly higher after some brief horizontal trading. You don't see the horizontal trading along one number lasting half the day, like we've seen in the recent past. You don't see the deep plunges of selling followed by immediate near recoveries followed by the process repeating again and again until longs wear down and the SP sinks. You see TSLA exceed some technically-significant prices and then take off in an upward direction. You see days when the mandatory morning dip doesn't happen, or it is so insignificant that it doesn't matter.

I believe that the fear of the SCTY acquisition is real but overblown. I think the weakness we have seen in the SP since it began its descent from 214 after the delivery number release has more to do with FUD and strategic selling than by a real fear by longs of the SCTY acquisition. After all, the market pretty much accepts the merger as inevitable now, and longs who disagree with the plan have already voted by selling, for the most part. It's going to be an interest week or so.

 

[brian45011]

Well, since the payables jumped quite a bit, there was quite some deferral as well
But I thank you for predicting the ZEV bonanza so accurately in this thread. That was quite an achievement, to dig it up for the rest of us.

I'm a bit puzzled by the big increase in share count from Q2 to Q3. Any explanation?
Q2 2016 letter, page 5: Shares used in per share calculation, basic and diluted 139,983K
Q3 2016 letter, page 6: Shares used in per share calculation Basic 148,991K Diluted 156,935K

There was no cap raise in Q3. What caused such increase? IIRC, annual dilution should be about 4% for stock based compensation. Is this big increase caused by repayment of the convertibles?

Shares count for EPS in a quarter is the mean between the count at the beginning and end of the quarter. When there is a loss, there can be not dilution since there is no share of profits to spread over more shares. The increase in undiluted (basic) shares results from the fact that the last equity offering was in May (and Elon's option exercise). The 2Q16 basic count was the average before and after those transactions (plus shares sold by other officers, directors, and employees). The early conversion of 2/3 rds of the 2018 notes added at most 1.5 million shares to the shares outstanding since the principal amounts were paid with cash, and no one knows how the Investor Bank hedge writers settled their obligations.

 

[MitchJi]

Mostly I'm having a bit of fun, but to be honest I can see $420 by Q4 2017.

But any bumps in the M3 production will probably have a big impact on the SP. OTOH TE could cause the SP to start trading in a higher band.

Good question from Phil LeBeau...like this inclusion of journalists.

Q. Expansion to Asia and Europe.

God, please not until after the M3 ramp is established.

Let's hope he also drained the Short Swamp as well !!!

The main short swamp I'd like to drained is the trolling posters on this thread.

- Tesla Energy might toss in a few million in profit.

TE made a few million in profit this quarter. It's in the letter.

 

[sub]

I prefer the shorts buy (cover) but your point was understood.

Edit:this is response to Papafox

 

[brian45011]

the 29.4% margin you are citing includes the impact of ZEV credits; 25% non-GAAP margins are the right number to think about, especially given they guided that ZEV revenue should be negligible in 4Q. Now I'm not saying 30% is impossible (particularly given Elon's comments about the significant demand for the P100D), but it would be a major increase from 25% to 30%.

just want to temper expectations based on what we know...

surfside

Why eliminate stock based compensation under GAAP when calculating GM or any other metric? Does anyone really believe that zero basis Restricted Stock Units or even the discounted shares under the ESPP have no "cost" , even an opportunity costs when Tesla floats another equity offering?

 

[dakh]

.

 

[GoTslaGo]

Congratulations TMC investor thread members, your analysis and estimates for Q3 beat the pants off anything provided by The Wall Street Journal, Fortune, Los Angeles Times, or CNBC. The rare journalists with quality reporting included Fred Lambert at Electrek.co and Daniel Sparks of Motley Fool.

I believe the games have just begun. TSLA is higher than it was this morning, but how high will it be ten days from now? Maybe the technical people can chime in and give us a SP above which TSLA is likely to move noticeably higher if it reaches that mark. Around the time of the deliveries report, that price was in the $215-217 range. Maybe it's still close to that. Expect the shorts to try the same old tricks to cap the run-up and keep it below technically-significant numbers. To combat such a strategy, we need a fair sampling of the holders of 28 million shorted shares to get uncomfortable enough to sell when they see TSLA climbing, and we need enough longs to help accelerate that run-up through buying. The true believers are short on dry powder these days, so we need some fresh longs to join in. A shift in the news cycle from Telsa-bashing to reporting positive Tesla stories will help draw new longs into the stock, and Elon's schedule of frequent events over the next two weeks will positively influence the news cycle. To bring more buying by the big institutions, we need either a breakout or we need the SCTY vote to complete and the deal to go through so that the big institutional investors finally get off the fence.

This ER by itself might not decimate the efforts of shorts to manage the stock price within boundaries, but maybe the excellent ER plus the prospects of a Friday solar show plus Nov 1 SCTY financial discussion plus the likelihood of an excellent 4th quarter plus Model 3 on schedule will get enough shorts nervous to make a fast exit for the door.

What does it look like when the shorts lose the ability to manipulate like they've done in the past? You see efforts to hold the SP at numbers like 214 fail after a while and the SP blast significantly higher after some brief horizontal trading. You don't see the horizontal trading along one number lasting half the day, like we've seen in the recent past. You don't see the deep plunges of selling followed by immediate near recoveries followed by the process repeating again and again until longs wear down and the SP sinks. You see TSLA exceed some technically-significant prices and then take off in an upward direction. You see days when the mandatory morning dip doesn't happen, or it is so insignificant that it doesn't matter.

I believe that the fear of the SCTY acquisition is real but overblown. I think the weakness we have seen in the SP since it began its descent from 214 after the delivery number release has more to do with FUD and strategic selling than by a real fear by longs of the SCTY acquisition. After all, the market pretty much accepts the merger as inevitable now, and longs who disagree with the plan have already voted by selling, for the most part. It's going to be an interest week or so.

Ok, I'll give it a stab at the TA. IF the price confirms* that this is an Eve-Eve Double Bottom (EEDB) here are some stats (from Bulkowski's Encyclopedia of Chart Patterns).

In a Bull Market. The chance of this pattern failing is 4% (meaning the price only rises 5% then fizzles or reverses). The average rise in price is 40% above the confirmation price (which I think is 213, thus a nosebleed price target of 298! Please check my math!). There is 55% chance that there will be a throwback in the price after it passes through the confirmation price (basically it will go back to the confirmation price, but bounce back up). If there is a throwback the top price will be lower. Approximately 67% of this pattern meets the price target. There is a lot more detail in the encyclopedia, but one thing he mentions is that in a bull market it takes almost 6 months to hit the ultimate high price, faster in a bear market (77 days average). Once it hits the ultimate high price, expect a 31% drop after the trend ends.

*The key is that the price has to confirm this is an EEDB. If it doesn't there is a high chance (64% failure rate) that this is NOT an EEDB and the glowing figures above do not apply. Also I do not know if the ATH prices apply to confirmation.

Also, I have no idea how a merger affects TA. No mention in any of my reading and online searches.

Please note there is a LOT more detail in the book, and I am not advocating anyone to trade on this information. Please do your own due diligence and seriously, take my information with a grain of salt.

 

[EinSV]

I don't think so. 29.4% GAAP gross margin includes $139 million in ZEV credits. This probably won't be repeated in Q4. I think we're probably looking at something like 28-29% for Q4.

Good point re ZEV credits -- thanks. (I blame my ER celebration Manhattan for the miss!)

I do believe the following factors, among others, should tend to push vehicle GMs significantly higher in Q4:

• Discontinuation of X60 plus higher option pricing
• Increased sales of P100D
• Continuing improvements in production efficiencies
• EAP and FSDC

ZEV credits will continue to be a wild card but the core vehicle margin trend should be strongly positive.

 

[MartinAustin]

Up about 4.5% in Germany so far...

 

[stealthology]

AJ has been "sour grapes" for many quarters now. Basically ever since Elon refused to answer his ridesharing questions

Are you sure it wasn't the SCTY deal? He helped raise funds right before the deal was announced, and I think @Papafox or @esk8mw mentioned some clients made him look bad.

 

[dakh]

.

Cell phone made a dot post of supreme significance... What a weird set we got. No buy on the rumor, and apparently no sell on the news. Then there's some more news, which aren't really going to be much of news unless there's some surprise. Then some more no-news news. How on Earth does one navigate that, holding short term options? Personally I'll just go with the gut which says if there's a substantial upward movement it'll more likely going to sustain. But I'll cap it at 2x for the first batch of lottery tickets.