Short-Term TSLA Price Movements - 2016

[AlMc]

Good points, but I remain more optimistic because when a short squeeze finally comes, and it will, the demand for those shares and the long-term expectations of current shareholders will yield a situation where the shares will be pricey once the squeeze gets underway. Between Model 3 reservations, confirmation that Model X production is ramping up nicely, and a quarter with positive FCF, we have sufficient catalysts ahead to bring that short squeeze into being, even in this environment.

Papafox; I enjoy reading your posts. My but....The 'short squeeze'. I posted a little earlier (now several pages ago) that this most likely does not happen at a time like this. I believe it was @jesselivenomore that pointed this out as well. It is difficult to have a short squeeze when most of the shorts are probably firmly 'in the money' at this point. They can exit calmly as the price rises from here and still make a profit.

The shorts have a different short/medium thesis than many of us here might have about TM/TSLA but they are made up by an equally diverse group of traders as the 'longs'. Many smart shorts have probably covered already and some will probably do so next week before earnings. Even if they hold through earnings and we get a 10-15% bump up to say $180 many can still exit and make a profit.

A real short squeeze will come if we have a steadily rising stock price and then get some unexpected news (aka: Jerome at 2014 Detroit Auto Show) that quickly propels the stock higher.

I hope that I am wrong and a short squeeze is right around the corner. Longs will have their day again. Just not counting on a short squeeze in the short term ( weeks/months )

 

[SBenson]

Tableau (DATA) got completely crushed over ER on Friday. The ER wasn't even that bad. Same situation with LNKD.

There is no mercy shown for even minor mishaps this ER cycle, especially for those companies where the stock price is based on high-growth/future-expectations.

I really hope TSLA frames the ER and Q1/FY guidance in a picture perfect manner. Market is taking no prisoners.

 

[vgrinshpun]

I was posting in response to the conversation regarding the currently existing transmission and distribution network owned by utilities. I agree that for developing areas of the world without currently existing transmission and distribution network there is realistic path forward to electrification based on solar and perhaps microgrids.

However, existing transmission and distribution networks in industrially developed nations will remain essential, because for various reasons distributed solar will be providing minority (less than one third per Elon Musk - listen starting from about 19:10) of total solar generation, while the remaining more than two thirds of solar generation will need to be "utility form" centralized, grid connected generation.

My point is that assumption that growth in solar generation will render grid unnecessary or non-essential is not realistic because it ignores that, as pointed out by Elon and JB, both total energy generated by utilities and independent power producers (IPP) will grow, and distributed solar will be ultimately limited to about one third of all solar installations.

I understand. You need to move your view from a qualitative one (yes, there will be a grid) to a quantitative one (the required capacity of a grid will grow or fall X percent). Consider a grid where 1/3 is generated where it is consumed and 2/3 storage is behind-the-meter. Let's also hold constant total annual consumption of power, which can easily be adjusted with some baseline growth rate. So relative to the grid requirements where there were essentially no DERs, how much transmission capacity is now needed? Right off the bat on a total volume basis the legacy grid now had 1/3 less energy to move each year. So the required capacity is about 1/3 less. But in actually the required capacity is driven much more by peak loads experienced through the year than average load. So both distributed solar and massive behind-the-meter storage levels out most of the gap from peak load to average load. So the peak load requirements easily fall in half. So I figure that the required capacity of the grid is 1/3 to 1/2 below the legacy required capacity. So, yes, there is a grid, but if it is not ruthlessly scaled back as solar and batteries come online, it could be sitting on 50% to 100% overcapacity. That would be a costly burden upon ratepayer to have to keep paying for so much overcapacity.

Although there are few things that need correction in your assumptions made above, even without the corrections, taking the extreme (and not realistic) result, you are essentially demonstrating my point. Even if legacy grid is sitting at 100% overcapacity (not a correct assumption, as shown below) when massive deployment of energy storage ideally (completely) flattens the energy demand curve, AND, as pointed by Elon and JB, the total energy generated by utilities and IPPs ultimately grows two times, there is NO overcapacity in the grid. The "overcapacity" referred to in your example is totally consumed by the growth in the ideally (completely) flattened demand curve.

As far as 100% overcapacity, if one assumes that today's demand curve is completely flattened into a horizontal straight line, the legacy peak will not be twice of the ordinate of the flat line, but closer to only 1.6x of it. This means that for ultimate outcome of energy storage deployed in the scale required for ideally flat demand curve *and* 2 times growth in energy generated and distributed by utilities and IPPs, the grid capacity will actually need to be increased as compared to the legacy capacity.

I am not sure if you hold this view, or it just seems that way from the wording (bolded above), but solar does very little to reduce the peak demand because it is not coincident with it. It could be readily seen from the generic demand curve taken from DOE/EPRI Electricity Storage Handbook shown below, which shows that deployment of solar reduces need for intermediate generation, rather than peaking generation. That is why mass deployment of battery storage is absolutely critical to further growth of the solar generation. It also means that growth of battery storage deployment needs to eclipse growth of solar generation in order to "catch-up" to all the solar that was already deployed without battery storage, in order to completely flatten the demand curve.

 

[theschnell]

Tableau (DATA) got completely crushed over ER on Friday. The ER wasn't even that bad. Same situation with LNKD.

There is no mercy shown for even minor mishaps this ER cycle, especially for those companies where the stock price is based on high-growth/future-expectations.

I really hope TSLA frames the ER and Q1/FY guidance in a picture perfect manner. Market is taking no prisoners.

I think they have to at least guide for matching or beating Q4 deliveries in Q1. I would love to see that, but I have my doubts. I think ramping the model X may be too big of a distraction.

If Q1 guidance is soft, I think $120 could be in play. I hope not, but think it could happen. If it does, that's when I back up the truck. If not, I'll just ride it back up with my current position.

 

[Papafox]

Papafox; I enjoy reading your posts. My but....The 'short squeeze'. I posted a little earlier (now several pages ago) that this most likely does not happen at a time like this. I believe it was @jesselivenomore that pointed this out as well. It is difficult to have a short squeeze when most of the shorts are probably firmly 'in the money' at this point. They can exit calmly as the price rises from here and still make a profit.

The shorts have a different short/medium thesis than many of us here might have about TM/TSLA but they are made up by an equally diverse group of traders as the 'longs'. Many smart shorts have probably covered already and some will probably do so next week before earnings. Even if they hold through earnings and we get a 10-15% bump up to say $180 many can still exit and make a profit.

A real short squeeze will come if we have a steadily rising stock price and then get some unexpected news (aka: Jerome at 2014 Detroit Auto Show) that quickly propels the stock higher.

I hope that I am wrong and a short squeeze is right around the corner. Longs will have their day again. Just not counting on a short squeeze in the short term ( weeks/months )

AlMc,
I'm not holding my breath for the short term, but later this year TSLA could indeed generate enough good news to put the stock in a position where a short squeeze could happen. Events such as getting Model X ramped up to equal Model S production and achieving FCF (in 2nd quarter) plus substantial production and deliveries underway with TE, plus a ton of Model 3 reservations could do the trick, me thinks. When I say "in this environment" I am using the term in perhaps a looser fashion than you are.

 

[maoing]

2015 Q1 guidance was lower than 2014 Q4 delivery. When model X ramp up succesfully (e.g. 3k delivery), we should see Q1 guidance at least 17K. If any number below that, market will either interpret model X issues or softer S demand, both of them are not good. Besides Q1 guidance, annaul guidance should be no less than 80K (per 1600-1800 weekly production rate elon guided last year), I don't expect 85K/90K to happen, but anything lower than 80K will be interpreted the same reason as mentioned above. So this is a tough ER for TM under this difficult market for tech stock.

Actually I would rather Elon to give realistic or pessimistic guidance to be conservative, SP will be hit hard post ER and expectation will be reset. Then TM can beat the guidance consistently in rest of 2016, plus model 3 reveal, model X ramp up, Tesla Energy, Gigafactory and etc. sizzling. Investors might expect a steady growth instead of ramdom roller-coaster performance. If Elon just gave too much sizzling in the CC, even with initial post ER pop, TSLA might be well dropped to this level again.

I think they have to at least guide for matching or beating Q4 deliveries in Q1. I would love to see that, but I have my doubts. I think ramping the model X may be too big of a distraction.

If Q1 guidance is soft, I think $120 could be in play. I hope not, but think it could happen. If it does, that's when I back up the truck. If not, I'll just ride it back up with my current position.

 

[ludicrousspeed]

2015 Q1 guidance was lower than 2014 Q4 delivery. When model X ramp up succesfully (e.g. 3k delivery), we should see Q1 guidance at least 17K. If any number below that, market will either interpret model X issues or softer S demand, both of them are not good. Besides Q1 guidance, annaul guidance should be no less than 80K (per 1600-1800 weekly production rate elon guided last year), I don't expect 85K/90K to happen, but anything lower than 80K will be interpreted the same reason as mentioned above. So this is a tough ER for TM under this difficult market for tech stock.

I think the Market has significantly lowered its expectations for Tesla and takes everything management says with a grain of salt. At this point, with how sentiment is turning, you would think Tesla is seeing peaking demand and slowing growth, not 50%+ y/y growth.

Reminds me of when Tesla closed at $270 on Q2 ER (Aug. 5th) when they lowered 2015 guidance from 55k to "50-55k" deliveries. The market then lowered its expectations of the company and questioned their execution. By Q3 ER (Nov 3rd), the stock was at $208. Tesla then lowered guidance again to "50-52k" deliveries... and the stock closed at $231 the next day.

The market will react neutral to positively with a 75K+ delivery guidance and predicting 2K Q1 Model X deliveries (it's a serious argument whether or not this vehicle will even work from an engineering standpoint.) This also fits in line with Elon's goal to set the bar lower because "winning needs to feel like winning."

 

[techmaven]

News on the Gigafactory front:

http://diversifynevada.com/uploads/reports/Tesla_Gigafactory_Q4_2015_Report.pdf

In Q4 2015, Tesla reports an investment of $78 million, for a PTD investment of $310 million;PENA reports an investment of $58 million for a PTD investment of $64 million; or a combinedPTD investment of $374 through year-end 2015. This total investment represents an estimated57% increase from the reported Q3 2015 PTD total investment of $238 million.

The $78 million is far lower than what I had expected. From the most recent 10-Q:

In 2014, we began construction of our Gigafactory facility in Nevada. Tesla’s contribution to total capital expenditures is expected to be about $2.0 billion over the next 5 years. During the nine months ended September 30, 2015, we used cash of $158.6 million towards the construction of this project and expect to spend up to $300 million for the full year.

That was supposed to be up to $141 million, but they only invested $78 million, or $63 million less. That could easily be some equipment that arrived in January instead of December, so it could be misleading. But in any case, that's about $60 million less than their original capex spending goal, unless they made that up somewhere else.

 

[nienco2]

I hope that I am wrong and a short squeeze is right around the corner. Longs will have their day again. Just not counting on a short squeeze in the short term ( weeks/months )

^^^^ +4
I'm amazed at so much anticipation/hope for a "short squeeze" as the basis for investment rationale. I've said it repeatedly that short sellers are not the problem, THEY HAVE ALREADY SOLD! What we need is to see positive fundamental performance improvement in the business to justify value of the stock to increase. If one more person replies that it is the dastardly "shorts" manipulating the stock price I will know for sure there is nothing meaningful to be gained here on this site.

 

[Zhelko Dimic]

^^^^ +4
I'm amazed at so much anticipation/hope for a "short squeeze" as the basis for investment rationale. I've said it repeatedly that short sellers are not the problem, THEY HAVE ALREADY SOLD! What we need is to see positive fundamental performance improvement in the business to justify value of the stock to increase. If one more person replies that it is the dastardly "shorts" manipulating the stock price I will know for sure there is nothing meaningful to be gained here on this site.

Nope, it's all the concerns about X model delivery and Tesla not coming clean, that makes people consider worst case scenarios that are probably way worse than reality is.
BTW, X not scaling yet, and not really coming into it's own until late Q2, and Elon guiding for 70K production, what is YOUR worst case scenario short and medium term?

 

[Papafox]

^^^^ +4
... I've said it repeatedly that short sellers are not the problem, THEY HAVE ALREADY SOLD! ...

We noticed a substantial change from the TSLA stock price trajectory compared to the NASDAQ once shorts were locked out from selling on Friday. Methinks plenty of shorts continue to influence the stock. There's no way that shorts could buy nearly 30 million shares during the stock plunge last week. That's about double the entire retail holdings of TSLA. Let's hope that the broader markets are behaving themselves on Monday so that we can see how the lack of short selling might influence TSLA behavior. I'm not expecting much climb, but a day of stable trading would be really quite welcomed. If the broader markets are dropping, all bets are off.

 

[vgrinshpun]

^^^^ +4
I'm amazed at so much anticipation/hope for a "short squeeze" as the basis for investment rationale. I've said it repeatedly that short sellers are not the problem, THEY HAVE ALREADY SOLD! What we need is to see positive fundamental performance improvement in the business to justify value of the stock to increase. If one more person replies that it is the dastardly "shorts" manipulating the stock price I will know for sure there is nothing meaningful to be gained here on this site.

Like AlMc, I also am not counting on short squeeze in the short term. However, I have question for you. If manipulation by short sellers is not real, why SEC enforces Short Selling Restrictions to begin with?

Go back and see the TSLA Friday's chart. Observe steady climb of TSLA after the rule was triggered, in a way that was totally divergent from the .IXIC, up to the point when short sellers reloaded algorithm to comply with the rule, drawing almost perfect horizontal line on TSLA chart. Here is why:

The alternative uptick rule (Rule 201) approved today imposes restrictions on short selling only when a stock has triggered a circuit breaker by experiencing a price decline of at least 10 percent in one day. At that point, short selling would be permitted if the price of the security is above the current national best bid.

 

[maoing]

Tesla raised $2.2 billion in March 2014 to build gigafactory. Anybody knows how much $ actually spent on gigafactory so far? Panasonic is on hook, but the investment will be contingent on demand. There is no other partners announced and thus no capital poured in besides Tesla and Panasonic. In bull market, we assume the capital can be raised easily. But in current market situation, Tesla needs to raise more money even for 1st gigafactory, then 2nd one, ramp up 400K model 3 annual production, build 2nd factory in China. Unless Tesla scale back it's growth plan, otherwise market will be scared by the staggering cash burn. But if Tesla is willing to reduce the cash burn, then market will assume the growth target will be further off and multiples will be reduced a lot.

News on the Gigafactory front:

http://diversifynevada.com/uploads/reports/Tesla_Gigafactory_Q4_2015_Report.pdf



The $78 million is far lower than what I had expected. From the most recent 10-Q:



That was supposed to be up to $141 million, but they only invested $78 million, or $63 million less. That could easily be some equipment that arrived in January instead of December, so it could be misleading. But in any case, that's about $60 million less than their original capex spending goal, unless they made that up somewhere else.

 

[techmaven]

Tesla raised $2.2 billion in March 2014 to build gigafactory. Anybody knows how much $ actually spent on gigafactory so far? Panasonic is on hook, but the investment will be contingent on demand. There is no other partners announced and thus no capital poured in besides Tesla and Panasonic. In bull market, we assume the capital can be raised easily. But in current market situation, Tesla needs to raise more money even for 1st gigafactory, then 2nd one, ramp up 400K model 3 annual production, build 2nd factory in China. Unless Tesla scale back it's growth plan, otherwise market will be scared by the staggering cash burn. But if Tesla is willing to reduce the cash burn, then market will assume the growth target will be further off and multiples will be reduced a lot.

According to the linked report, Tesla spent $310 million so far. This first phase of the Gigafactory is likely about $450 to 550 million for Tesla, so Tesla is roughly on track. Certificate of occupancy was only issued in early October. Nice to see real money invested by Panasonic, $64 million by end of 2015. Their investment should ramp sharply as the shell of the pilot plant is either done or near completion. The earlier capital raise was not just for the Gigafactory. As for Panasonic, they have committed a vast amount of money... But they want to reassure their investors that this time, unlike last time they are investing according to demand. They had to make huge write downs a few years ago because the big automakers did not order EV batteries as expected. Tesla, on the other hand, is demonstrating demand.

 

[CyberDutchie]

What happened to Julian, did he get banned? We need his posts, seems only pessimists and doom and gloom left posting here...

 

[Yggdrasill]

^^^^ +4
I'm amazed at so much anticipation/hope for a "short squeeze" as the basis for investment rationale. I've said it repeatedly that short sellers are not the problem, THEY HAVE ALREADY SOLD! What we need is to see positive fundamental performance improvement in the business to justify value of the stock to increase. If one more person replies that it is the dastardly "shorts" manipulating the stock price I will know for sure there is nothing meaningful to be gained here on this site.

Some shorts have definitely taken profits. Other shorts have just entered the arena, hoping to repeat the success of the other short sellers. And most shorts are probably sitting still, waiting for TSLA to reach bottom.

I don't think a short squeeze will have much oomph in the short term, but you could easily get some upwards pressure from shorts who sold at 160, if the SP goes up. This factor would combine with profit-taking from more long-term shorts, as well as longs getting back in the game. So, all in all, the SP may increase fairly quickly once it starts to rise.

 

[larmor]

What happened to Julian, did he get banned? We need his posts, seems only pessimists and doom and gloom left posting here...

The best strategy is to buy low and sell hi. This is very difficult to do. If this is not the low point for TSLA, i would suggest revisiting the widget that they are selling, the market they are selling too and what percentage of that market they have captured. From what I have learned here on the forums, MS sales have increased, and other similarly priced cars have experienced declines.

So orders, deliveries, seat posts, etc, what is compelling is the market share they are capturing.

If MX has great safety crash test results, then watch out, the luxury SUV market will crater. Consumers generally purchase SUVs for their feeling of safety, not for off roading.

Just my 0.02...

 

[ev-enthusiast]

What happened to Julian, did he get banned? We need his posts, seems only pessimists and doom and gloom left posting here...

Julian got banned?!

 

[dakh]

What happened to Julian, did he get banned? We need his posts, seems only pessimists and doom and gloom left posting here...

Well, if we get trained that 160 is the new 220, when it hits 220 there would be much cheering.

 

[ev-enthusiast]

IMO ER will be an amazing sell the news event.