Short-Term TSLA Price Movements - 2016

[Gtoffo]

Looks like we are all jinxing it... let's leave amateur hour do its thing shall we....

 

[Mike Smith]

wow, 2.6 million shares trades already

 

[Ovulation]

I'm fairly sure a lot of the short selling is coming from oil industry operatives wanting to make capital raises more costly for Tesla. That strategy is no longer in play if Tesla doesn't need to raise money.

I think there are two misconceptions on wall street that keep the SP down

1. When these guys hear cleanttech they begin to bark like Pavlov's Dogs, its quiet funny. Guys like Canos live in the past ... when clean tech sucked, they don't consider the improvments in the technology and so they predict wrongly the future.

2. The Street thinks that there is no value in manufacturing, again, in the past there was crazy growth from software driven startups (conclusion manufacturing sucks). But today, in the era of the internet of things, there is software talent in abundance, the difficult stuff is the hardware and believe me caterpillar, GE etc. knows this. They wont allow, like in the past, some software geeks take the most value of their product, (like MobilEye tried whith Tesla) + I think in the next 5 years we will see an explosion in productivity as more and more stuff gets automated.

 

[FluxCap]

@Daniel Sparks article just came through. Nice one!

Tesla Motors, Inc. Reports a Profit as Sales Jump -- The Motley Fool

 

[Gtoffo]

there is software talent in abundance, the difficult stuff is the hardware

Have you tried hiring a software developer recently?

The reason traditional automakers can't compete with Tesla is that they have no idea of how to do software. Just have a look at any other automaker's on board computer. 15 years behind the curve.

Compare the number of software developers currently working at TSLA with those at any other auto company.

It's about culture. And it's about software (nowadays you use software to improve and innovate hardware/manufacturing). Nothing else matters IMHO.

 

[SBenson]

Oh, the day's not over yet. Fireworks to come.

niedermeyer???? daily kanban???

... He said 5 minutes in to trading.

Jesus, did NOT expect that you guys are expecting much higher than a $10 bump.

Okay...

 

[MitchJi]

The question, which authors of this article seem to be oblivious about, is who's technology will be used for solar roof that will be revealed on Friday.

As I mentioned before my hypothesis is that Tesla will use modules with Pana technology for existing roof installations (residential and commercial/industrial) and for utility scale projects. Silevo technology, on another hand, will be used for new solar roofing (residential and commercial).

These are two different markets. Since solar roof "beautiful" modules likely carry premium over the regular modules, both technologies will likely to be used in production at the Buffalo factory.

Roof modules will need to be affordable. It's possible that if they can produce plain modules for less than colored modules that they will offer both options but I don't believe that they will use different underlying technology.

Why? Both the Tesla and the Panasonic official release are in complete agreement that Panasonic delivers the manufacturing and technology know how while SolarCity delivers the sales organisation. On the flip side, Electrek had to explicitly reach out to a spokesperson to get them to say something about their own tech or pure speculation about a product that hasn't been announced yet. Both alternatives remain plausible but I think the long shot is now firmly on the bet that Silevo technology will remain of major importance while the more likely conclusion is that it may just play a minor role in the future of the Buffalo plant.

IMO that's a highly unlikely interpretation of that press release. I think Vlad's theory is even more unlikely. I'm sorry but I'm too tired to explain why. We'll see in a few days. I'll be happy to send you both a small gift if either of you are correct.

I believe that Tesla is using Panasonic to produce solar modules mainly based on Silevo's technology. When they hired Peter Hochholdinger they listed his experience with Audi to support the fact that it was a good hire, not because they plan to produce ICE cars. I believe that they listed Panasonic's experience producing solar modules for exactly the same reasons.

 

[Lump]

RBC Capital Analysts Joseph Spak and Jacob Hughes, who have a price target of $210 a share on the stock, down from a prior forecast for $220 per unit, said not much has changed even after the company reported its profit.

"The (profit) should give some confidence to bulls that underlying performance is improving," the analysts said. "However, little to change the narrative bears express over Model 3 ramp and SolarCity(SCTY) concerns."

The analysts said while gross margins in Tesla's automotive segment expanded "nicely" to 25%, that figure excluded credits for zero-emission vehicles, without which the company wouldn't have been profitable. Management seems to have an "improved handle" on operations, but Spak and Hughes said the company may be moving too fast on its Model 3.

The analysts also expressed worries over the speed of its purchase of SolarCity(SCTY). Elon Musk, the chairman of both Tesla and SolarCity(SCTY), said the acquisition will have a "neutral" impact on Tesla's fourth-quarter earnings, and that SolarCity(SCTY) may become a "cash contributor" to Tesla.

The acquisition has become a point of contention among investors who question whether it's the best use of Tesla's capital.

"We view the current Model 3 ramp timeline as aggressive and do have concern about distraction/disruption from the potential (SolarCity(SCTY)) deal," the RBC analysts said.

 

[electracity]

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.

I'll add to that list less re-work on the model X. Making it right on the assembly line saves a lot of money

 

[FluxCap]

Well, we don't have the 10-Q yet. But Q2 had an elevated amount of work in progress and finished goods inventory, and a relatively low raw materials amount given the increase in production. From Q1 to Q2, the raw materials amount dropped by $70 million and basically they had a problem getting those vehicles delivered - finished goods inventory went up from $473 million to $755 million. So basically, AP increases were low in Q1 and Q2, as raw materials ordered were relatively low in comparison to the production increases. Now with production in full swing for the Model X, the increase in production means an increase in ordering raw materials... so AP should be at this level. QoQ production increases were 10%, 18% and then 39%. If you apply that to AP, you get $1.47 billion, then $1.74 billion, then $2.41 billion. So $2.3 billion is well within what is expected for that kind of production growth. As a result, this isn't a one off, we didn't pay the suppliers thing, just a normal expected dynamic of a growing business.

Once we look across 4 quarters or more, this likely becomes much clearer... it's one of the problems of seeing quarterly snapshots.

Math checks out.

If payables had not gone up significantly I would be worried -- it obviously takes more parts and materials to make more cars. To suggest otherwise is simply foolish.

I think there is opportunity here for buyers right now to make money on the steadily increasing positive reaction to this news, the Friday news, and the Tuesday news about SCTY which looks to be a great story. The opportunity is to get back into TSLA now, before the market realizes how good 2017 is going to be.

 

[stealthology]

Analyst notes P/T adjustments. We've got Baird below as usual, and the more bearish analysts in quotes (not wasting any time!) so not to take up too much real estate on here. Waiting for MS..

Reiterate Outperform rating and $338 price target. Q3 results beat expectations
across the board with strong gross margin, demonstrating improved operational
efficiency. Importantly, management confirmed that the battery factory (cell
production in Q4) and Model 3 (volume production 2H:17) are on time. Additionally,
Musk indicated a capital raise may not be necessary for the ramp of the Model 3
(although an opportunistic raise could occur). We continue to recommend shares as
several catalysts over the next year should drive shares higher Baird on TSLA Reiterate Outperform rating and $338 price target

(07:16:28 AM): Tesla's Elon Musk announcing a future roadmap, noting Tesla car's going forward will use NVDA's Titan GPU away from the MBLY . Assuming all the ~90K cars/year that Tesla builds, it is ~$25M revenue incrementally for NVDA if Tesla outfits all cars. This underlines positive trend for NVDA's GPU implementation. As we have noted the need for fusion solutions drives competition to camera systems with NXPI's Bluebox, Intel's Xeon, XLNX Renesas R-Car among others, but also now raises the bar for other Auto OEMs to accelerate a roadmap to Level 4/5. - NVDA at Mizuho

(08:43:16 AM): TSLA: Goldman sees Tesla's capital needs pushed out until Q3 2017
Goldman sees Tesla's capital needs pushed out until Q3 2017
Goldman analyst David Tamberrino said Tesla reported a solid Q3 but it is not enough to overcome what he sees as increased risk to the company's capital deployment strategy and uncertainty in 2017 from the Model 3 launch. The analyst now expects Tesla will need to raise capital in Q3 2017 from Q4 2016 previously as the Model 3/gigafactory capex spend is weighted towards 1H 2017. Tamberrino raised his price target on Tesla to $190 from $185 and maintains his Neutral rating. From thefly.com

(07:43:51 AM):
Tesla quarter not as good as it looks, says JPMorgan JPMorgan analyst Ryan Brinkman says Tesla's Q3 earnings report is not as good as it looks. At first glance, the quarter looks like a "very strong beat" across all metrics, Brinkman tells investors in a research note. Tesla, however, reported a $139M benefit from the sale of Zero Emission Vehicle credits versus its guidance for a negligible amount, which alone helped earnings per share by 73c, the analyst contends. Brinkman also sees some "comparability issues" relative to Tesla's reported revenue, gross profit, and net income given the "complicated" change in accounting methodology. The analyst views the quarter as good, just not as good as it looks on the surface. He keeps an Underweight rating on Tesla with a $180 price target. The electric carmaker is up 5%, or $10.16, to $212.40 in pre-market trading. ..Tesla quarter not as good as it looks, says JPMorgan JPMorgan analyst Ryan Brinkman......From thefly.com

(07:43:39 AM): Key takeaways from 3Q16
TSLA reported 3Q EPS of $0.71, well above our estimate of $(0.65) and the Bloomberg
consensus of $(0.54), although this includes roughly $0.90/sh from ZEV credits and
$0.16/sh from the add-back of higher-than-modeled stock-based comp. Adjusted
Automotive gross margin (excluding ZEV credit revenue) of 24.5% was slightly below our
24.7% forecast, although up sequentially due to improved manufacturing efficiency and
operating leverage on higher volumes. TSLA reported free cash flow of roughly $176mm
in 3Q, which was better than expectations, although this incorporates a lower-than-run
rate capex ($247mm vs. implied run rate of $450mm+), benefits from accounts payable
versus accounts receivable of about $500mm, and $139mm from ZEV credits.
Nonetheless, we believe TSLA�s relatively new CFO Jason Wheeler is doing a
commendable job conserving cash. We would note that TSLA recently revised aspects of
its accounting methodology, which was reflected in our somewhat comparable
estimates.
Revising estimates and PO post-3Q
Following the 3Q results, we are revising our forward estimates, including 2016 EPS
from $(3.85) to $(1.99), 2017e from $(2.25) to $(0.25), and 2018 from $(0.35) to $2.05.
It should be noted that we are now including ZEV credits in our estimates, which account
for more than half of the increase. We are also revising our price objective from $155
to $170, which is still based on an average of 2017e EV/Sales and EV/EBITDA multiples
from a set of comparable tech companies. We would note that our estimates do not yet
include any impact from the proposed merger with SolarCity, as the deal has not yet
closed.
3Q was good, but show us consistent cash generation
TSLA did an admirable job in 3Q of thrifting its R&D and capex spend in 3Q, which, in
addition to operating leverage, helped drive the better-than-expected earnings and cash
flow in the quarter. And encouragingly, TSLA did lower its FY16 capex outlook to $1.8bn
(prior $2.25bn) and expects to keep R&D expenses relatively in line with current levels, as
it continues to realize efficiencies on its investment spending. However, we believe a
burden of proof remains for TSLA to either keep its spending in check or start generating
material operating cash flow to support higher spending levels before we fully accept the
notion that TSLA can be free cash flow positive on an annual basis. In our view, the TSLA
bull case rests on the ongoing success of Model S, continued ramp-up of Model X, and
cash flow to bridge to the expected 2017 launch of the Model 3, all of which will likely
necessitate a ramp in investment, and could pressure cash flow generation. TSLA @ BOFA ML

(07:50:07 AM):
Quarter should give some confidence to bulls that underlying
performance is improving. However, little to change the
narrative bears express over Model 3 ramp and SCTY concerns.
What's new? What's changed? Tesla printed a profitable 3Q16
and delivered positive FCF on solid gross margin expansion
reflecting improved operational performance. We note that
while automotive gross margins did expand nicely to 25%
excluding ZEV credits of $139mm, TSLA would not have been
profitable this quarter without them. TSLA maintained its
full year delivery and gross margin guidance, and expressed
confidence that the Model 3 launch is on track. Commentary
suggests that management has an improved handle around all
operations. Still, we view the current Model 3 ramp timeline as
aggressive and do have concern about distraction/disruption
from the potential SCTY deal.
On to SCTY. A number of key dates upcoming: 1) integrated
solar roof/storage product on 10/28, 2) additional information
about combined company on 11/1, 3) shareholder vote on
11/17. - TSLA at RBC Cap

Q3 profit likely turns negative in Q4
We see TSLA's guidance for positive GAAP net income in Q4 as very challenging.
Excluding ZEV credits, Q3's $0.71 profit would have been a $0.18 loss. With no ZEV,
higher opex, and ~flat q/q deliveries, achieving the target Q4 profit will be tough, in
our view. We estimate that to reach breakeven auto gross margins would have to
increase from 25% in Q3 to over 30% in Q4 (see Figure 1). The discontinued Model X
60 & added 100 version help, but the decline in Model X Signature, rising Model S 60
mix, and limited q/q fixed cost leverage will be offsets. Consequently, we are
forecasting a $0.30 Q4 loss. We remain cautious as the Q3 beat was driven by onetime
ZEV credits, Q4 EPS target looks too aggressive, and we expect cash burn to turn
significantly negative in Q4, which supports our view that further capital raises remain
very likely.
Positive Q3 cash flow likely unwinds in Q4
We believe the cash inflow of $176m in Q3 ($349m adj. FCF) will likely reverse in Q4 as
working capital unwinds and capex rises ~4x (see Figure 2). In Q3, TSLA realized
+$580m in operating cash from working capital; we expect this to be -$150m in Q4.
Based on FY guidance of $1.8bn, capex is also expected to ramp up from $250m in Q3
to $1.05bn in Q4 and remain elevated through Q2 of next year. While TSLA claims it
has enough capital, we still believe a capital raise is likely within the next year. Q3
comments on potential Asia or Europe capacity may provide the capital raise rationale.
Raising 2016 EPS on beat, but cautious on Q4
We are raising our 2016 EPS from -$3.30 to -$2.50, $0.31 of which reflects the Q3
beat (helped by ZEV credits) and $0.49 reflects a higher Q4 margin outlook. We are
forecasting a loss of $0.30 in Q4. We are also lowering our 2017 & 2018 EPS to reflect
higher than expected lease penetration (profits get deferred), though partially offset by
higher margins. Our 2017 EPS fall from -$1.30 to -$1.50 and our 2018 EPS falls from
-$2.05 to -$2.35. We maintain our 2019/20 EPS as the lease & margin impacts offset.
Valuation: Maintain Sell rating and $160 price target
We are maintaining our $160 DCF based price target as the near term forecast changes
have a limited impact on the DCF. UBS cautious on Q4 (TSLA)

 

[Gtoffo]

Crossing the 200 SMA would be huge.

We bounced off twice today already.

 

[FredTMC]

Analyst notes/P/T adjustments. We've got Baird below as usual, and the more bearish analysts in quotes so not to take up too much real estate on here. Waiting for MS..

Reiterate Outperform rating and $338 price target. Q3 results beat expectations
across the board with strong gross margin, demonstrating improved operational
efficiency. Importantly, management confirmed that the battery factory (cell
production in Q4) and Model 3 (volume production 2H:17) are on time. Additionally,
Musk indicated a capital raise may not be necessary for the ramp of the Model 3
(although an opportunistic raise could occur). We continue to recommend shares as
several catalysts over the next year should drive shares higher Baird on TSLA Reiterate Outperform rating and $338 price target

Hey, thx for putting this together!

What a bunch of haters... pathetic.

 

[racer26]

how's the short availability? I imagine that's a big part of what's allowing it to bounce off the 200SMA. They'll only be able to keep it at bay until they run out of ammo.

 

[Ovulation]

Have you tried hiring a software developer recently?

The reason traditional automakers can't compete with Tesla is that they have no idea of how to do software. Just have a look at any other automaker's on board computer. 15 years behind the curve.

Compare the number of software developers currently working at TSLA with those at any other auto company.

It's about culture. And it's about software (nowadays you use software to improve and innovate hardware/manufacturing). Nothing else matters IMHO.

When you build the hardware you can better custumize the software, the other car companies simple are not there yet in the Age of the internet of things, but they will ... soon

 

[dennis]

Do you really believe that Tesla had a team of great self driving, AI, ang signal processing experts on their staff, who they used to implement their system or do you think that they had the vision to hire and direct a team of great engineers to do it? IMO what differentiates Tesla's efforts in full autonomy is mainly Elon's direction.

You seem to be missing the point that Elon is a not just a visionary, he is a Visionary Engineer. Because of that he is able to lead Tesla (and SpaceX) into attempting and delivering on much more challenging agendas than say Steve Jobs at Apple who was a Visionary Marketeer.

It's said that organizations model the behavior of the person at the top. At Tesla Engineering Is the dominant department, not Marketing or Sales or Finance as it is at so any other companies. Tesla's ability to attract engineers and Elon's ability to inspire them to solve problems that would be insurmountable for other companies gives me great faith in Tesla's future.

One more example. When Elon realized the challenge of scaling Model 3 manufacturing to 500K cars in less than 3 years, he didn't bring in experienced manufacturing consultants. Instead he turned to his CTO and his Product engineers to solve the problem from first principles, even though they likely have very little manufacturing experience.

 

[Gtoffo]

When you build the hardware you can better custumize the software, the other car companies simple are not there yet in the Age of the internet of things, but they will ... soon

European automakers don't have the culture to "get it".

The approach TSLA has to the market is radically different from the rest: integration, software, move fast and break things

Compare that with: outsourcing, logistics, don't get sued

You don't change culture overnight. Other automakers have been dead for the last 5 years. They just don't know it yet.

This is my investment thesis and why I bought TSLA when it was at 30$. And it is why I'm all in today.

 

[esk8mw]

We need to break 213.70 (recent peak Oct 3) to really break out. I think we will get there no later than the end of the week. Sold half my weekly calls at a nice gain (could have been better) and holding the Nov 4 calls a bit longer to let this play out. Congrats bulls!

 

[Rarity]

how's the short availability? I imagine that's a big part of what's allowing it to bounce off the 200SMA. They'll only be able to keep it at bay until they run out of ammo.

They have plenty of ammo. None of my TSLA shares have been lent out after have been returned to me on the 18th. On the other hand, my SCTY position wasn't fully lent out until this morning. But Fidelity is only paying 2.25% for lenders of SCTY.

 

[vgrinshpun]

Some serious shorting is going on. There were 763,130 shares available for shorting yesterday after market close at Fidelity (1.5% interest). It plummeted by more than 284K shares to 478,745 by 10:13am, and then further down to 451,445 by 10:16am (interest rate went down to 1%).

So we are not seeing taking of profits (duh), these are shorting attacks trying to keep stock from breaking out of symmetrical triangle I posted couple of days ago.