Short-Term TSLA Price Movements - 2016

[SBenson]

Gaining Momentum with Tesla Powerpack

Did you get a chance to look at the Powerpack site? Is this new pricing?

Build your Powerpack Energy Storage Solution | Tesla

Wondering what your thoughts are. Obviously you are the best source we have on this topic

 

[larmor]

This is the really big thing that a lot of people don't realize, because few people have experience with the hydro bills for a big factory.

Big factories and other big energy consumers (mining is one, I know that Potash Corp of Saskatchewan is SK's largest consumer of power. They consume something like 70% of all of SK's power in the overnight period), pay huge fees for their peak load usage to the power company. Its not like your house where you just pay for how many kWh you use, the big users also have to pay an additional fee sized to how big their peak usage is (and therefore, how much bandwidth on the utility's infrastructure they need to dedicate to that user).

Those fees are massive. I work for a small manufacturing company (we build small precision research instruments). We recently moved buildings, and when the power company heard we were a manufacturing facility (which is true, but our power consumption profile is similar to that of any ordinary 10-12 person office), they wanted us to pay something like $50,000 upfront for the peak-usage fees until they could figure out what our usage profile was like (in the end, being a small office, we don't pay them at all - the $50,000 represented substantially more than an entire year of our hydro bills). For the users that those fees actually apply to though? A couple PowerPacks might be able to distribute your peak loads a bit if they're intermittent, and move you down to a lower-tier fee.

Just wanted to make sure people understand industrial scale power, so please re read above post...

 

[Papafox]

This makes sense to me.

I changed the highlighting above as I had not really focused before on the italicized language. It seems to be saying:

(1) Model S prices decreased by 4.5% (6.5%-2%) for reasons other than inventory sales,
(2) most of that was due to S60 sales, and
(3) if the P100s had been available that would not have been an issue.​

So I wonder if availability of P100Ds alone could raise margins by 2-3% in Q4 (or more) compared to Q3. The significant impact of P100Ds on overall margins would help explain Elon's comment in the ER call that he was spending so much time personally on 100kWh production -- I initially thought thought was a curious way for him to be spending his time.

Expanding deliveries by offering a lower-cost version of the car such as the S60 negatively-affects average selling price, but it also cuts the cost of producing all vehicles, since the larger volume allowed each car to take a smaller chunk of the fixed costs of production. Thus, you see lower revenue per vehicle, but lower cost per vehicle, too. If the spread between revenue and costs increases by 2-3%, you have the GM improvement you've been looking for.

Producing more P100Ds can benefit GM in two ways: P100Ds have a much higher spread between their costs and revenues than other Model S vehicles (typical of high-end vehicles), and producing lots of P100Ds makes a small contribution towards splitting the fixed costs of the factory between more vehicles and thereby lowering average cost per vehicle.

 

[Value Ev]

I agree that the SCTY is currently a boat anchor for the Tesla SP and I believe that that represents a possible opportunity in the short term. It's possible that Elon can turn the perception around so that it becomes a positive and that would have a huge positive impact on the SP.

My option buys for the ER-Roof, TE announcement were SCTY 19 and 20 calls. As of the close yesterday they were both up by over 25% and the roof event hasn't even happened yet!

Once the announcement is done today, the stock will be released of it's earthly shackles and soar again to at least 221 (my prediction after the earnings call, but the nasty shorts are keeping this down).

The only surprise is why have the event on Friday? Having it on Monday would build up the excitement for the retail buyers the next morning.

 

[Ovulation]

Even if a cash generator, the death of the retail PPA business model industry-wide is where the heartburn lies. If not handled carefully, it could blow up Tesla. And even if it doesn't blow up Tesla, it easily could make Tesla's financials incomprehensible.

The most important assets that Tesla get's form SolarCity are the Installers (according to Elon), they are still needed with or without PPA and when the smart home thing continues they may become even more useful.

 

[esk8mw]

Just wanted to drop a note on VIN assignments for the first month - they are scorching.

The S appears to have assigned about 7,000 VINs from 10/4 - 10/28. Compare to a rate of about 5k/month last quarter.

The X appears to have assigned about 4,500 VINs from 10/3 - 10/28. Compare to a rate of about 3,500/month last quarter.

Obviously no data on build rate, but the demand appears to be there. I'm sure some are allocated to replenish inventory sold at the end of Q3 as well. Even so, that's a significant spike. The wait times for new orders seem to bear this out.

 

[Ovulation]

Once the announcement is done today, the stock will be released of it's earthly shackles and soar again to at least 221 (my prediction after the earnings call, but the nasty shorts are keeping this down).

The only surprise is why have the event on Friday? Having it on Monday would build up the excitement for the retail buyers the next morning.

I fear the SP will only significantly gain when it is obvious that SolarCity is not a cash cow.

 

[electracity]

Well when SolarCity will be, in the near term, a cash generator like Elon suggested than was all the panic about the merger BS

Musk is excluding the need to finance PPA's.

 

[esk8mw]

I fear the SP will only significantly gain when it is obvious that SolarCity is not a cash cow.

Note that Elon is presenting the financial rationale for the deal on Nov 1. Depending on how clear Elon presents the data - and the extent to which investors are willing to continue to not believe what he says - it could be made clear on that date. As per recent price action, however, I agree that WS will require Tesla to actually back up the assertions before giving any credit. That should start to come on the next earnings call in 2017.

 

[CALGARYARSENAL]

A thing of beauty in the underground parkade: Chinook Centre Calgary.

 

[MitchJi]

Note that Elon is presenting the financial rationale for the deal on Nov 1. Depending on how clear Elon presents the data - and the extent to which investors are willing to continue to not believe what he says - it could be made clear on that date. As per recent price action, however, I agree that WS will require Tesla to actually back up the assertions before giving any credit. That should start to come on the next earnings call in 2017.

I think he'll get some credit immediately.

Not sure how much, sell the news?

 

[pGo]

Ok, lets go with that. So if some folks are repeatedly shorting and covering, shorting again and covering again. If they are repeatedly doing it at the most oppurtunate moments... That would just be "trading" right? how is this different from actively buying/selling (instead of shorting/covering)... What I thought you are making a claim is that shorts are suppressing the stock price. I am having a hard time connecting the dots to that.

Yesterday's volume was 13mil shares. Could shorts really "control" the price with that kind of volume?

Regardless, if there is an opportunity in the market that is obvious, it doesn't stay there for long. New longs would arrive and seize the moment on discount. The SCTY trade in disparity is an example that market is not sure yet if that's a good deal. If today and Nov1 doesn't convince the market, things may go south from here. I don't see this possibility being discussed here.

 

[Ovulation]

Musk is excluding the need to finance PPA's.

Is he, I didn't hear it but I guess so and are this PPA deals really so evil? since SunEdison people go almost paranoid when they hear solar^^

 

[cluster]

Just wanted to drop a note on VIN assignments for the first month - they are scorching.

The S appears to have assigned about 7,000 VINs from 10/4 - 10/28. Compare to a rate of about 5k/month last quarter.

The X appears to have assigned about 4,500 VINs from 10/3 - 10/28. Compare to a rate of about 3,500/month last quarter.

Obviously no data on build rate, but the demand appears to be there. I'm sure some are allocated to replenish inventory sold at the end of Q3 as well. Even so, that's a significant spike. The wait times for new orders seem to bear this out.

I think your estimate doesn't reflect the truth. One needs to check how many VINs actually reported, rather than just subtracting the lowest from the highest VINs. It is because Tesla sometimes reserves batches of VINs, e.g., maybe just didn't use at all. One clear example is the second quarter during the facelift, a substantial amount of VINs were skipped, which is similar to this Q but due to AP2.0. Now we all know Q2 number isn't good. I am not implying Q4 wouldn't be good.

 

[JRP3]

That's probably incorrect, unless there's a powerpack 3 coming soon,

Actually that's what I'm expecting eventually. I think the new Powerpack density comes from the tighter cell level packaging that created the 100kWh cars plus tighter module level packaging. I doubt they are yet producing 2170's in volume.

 

[Papafox]

Ok, lets go with that. So if some folks are repeatedly shorting and covering, shorting again and covering again. If they are repeatedly doing it at the most oppurtunate moments... That would just be "trading" right? how is this different from actively buying/selling (instead of shorting/covering)... What I thought you are making a claim is that shorts are suppressing the stock price. I am having a hard time connecting the dots to that.

Yesterday's volume was 13mil shares. Could shorts really "control" the price with that kind of volume?

Creative timing of selling and buying can indeed suppress the stock price, even if the net change of a trader's shares is zero at the end of a one or two day period. What I see is that the selling often takes place below critical technical points. Consider a decision to keep TSLA below 215, for example. Above 215 the stock is ready for a breakout, but below, it remains within a trading range. If shorts sell as the SP approaches 214, they can momentarily pause the rise at 214. When this pause happens, other shorts feel some relief because they're no longer tempted to cover. Other investors (both longs and shorts) see the pause and think, "Ah, maybe we've hit the top." When the SP starts decreasing (often requires some more selling), then longs and shorts join the selling because TSLA has topped out for the day. When other shorts and weak longs have driven the SP down to 203, you start a slow process of buying, so that your net change in shares over a one to two day period is zero. This choosing of when to sell, how to sell, when to buy, and how to buy affects the perceptions of the other traders, and it is the other traders who do most of the work. I'm thinking that 200,000 shares can easily top the kind of morning rally we saw yesterday, and the big dog shorts have access to that many shares.

You're dealing with psychology of the market and you're artificially creating a high that is lower than it would be otherwise. You're probably thinking that this is pie-in-the-sky, but stay with me for a moment longer. TSLA is a stock that people avoid buying when it is going down because it is such a volatile stock. Investors typically wait for the stock to bottom out before buying back in. Similarly, when the stock is rising, shorts are getting nervous and considering buying to cover, but now some big dog shorts come along and do something counter-intuitive, which is to start selling a rising stock. If they have enough horsepower, they stop the rise, and the trading story of that stock is rewritten.

Why then, you might ask, don't we see this kind of trading with other stocks? I suppose it is possible with some, but not with many. Two ingredients are needed: a hazy valuation for the stock (TSLA is a growth stock with analyst targets all over the board) and you need a negative stimulus that validates the pause in the rise of the stock after good news. That negative stimulus is fear of the SCTY merger. Traders watched TSLA stock climbing and then reverse direction yesterday, and there's a somewhat plausible explanation that someone is now selling because they're lightening their portfolio because of the pending merger. You have all the ingredients here for the psychology of the market to be manipulated by creative selling. Look at how many people trade using technicals. TSLA was climbing out of the triangle yesterday when short-sellers put the brakes on the climb and started it heading down again.

Ask yourself, is it reasonable for the SP to retreat to its starting point the day before the excellent ER was released. No! It is not reasonable. What I offer here is a reasonable explanation for unreasonable stock price behavior.

 

[larmor]

Regardless, if there is an opportunity in the market that is obvious, it doesn't stay there for long. New longs would arrive and seize the moment on discount. The SCTY trade in disparity is an example that market is not sure yet if that's a good deal. If today and Nov1 doesn't convince the market, things may go south from here. I don't see this possibility being discussed here.

Even without solar, the battery/inverter system, from what i understand for the website for residental use would allow homeowner to store electricity at nite from the utility, at a lower rate, and use it during the day when rates are higher. Time shifting rates for home and industry....

 

[Yggdrasill]

Actually that's what I'm expecting eventually. I think the new Powerpack density comes from the tighter cell level packaging that created the 100kWh cars plus tighter module level packaging. I doubt they are yet producing 2170's in volume.

I can see the possibility that they are using a larger number of 18650s, but I will be disappointed if the 21-70s still aren't ready, even in light volume.

We know Tesla is using "pods", and I think we can assume the new powerpack/powerwall is using a new type of pod. Tesla may have designed the new pod to be able to fit two configurations:

1. Two P100D-type 18650-based modules, increasing the energy per pod from 6.4 kWh to maybe 7.5 kWh.
2. Two 21-70-based modules, increasing energy per pod from 6.4 kWh to maybe 8.6 kWh. (Plus possible improvements in chemistry.)

They could start off making the first variant for the version 2 Tesla Energy products, until the 21-70 cells are available in good quantities.

However, why develop a variant that will only be in use for about two months? The Gigafactory should be producing significant volume by the end of the year. This is why I hope and believe the products to be unveiled today use 21-70s. If it's using 18650-cells - that could indicate delays at the Gigafactory... If they use 21-70s, that indicates that the Gigafactory may already be producing cells. (I've been paying attention to what's been said by Tesla, and the wording hasn't ruled it out.) Another alternative is that they are shipping in cells from Japan, as has been mentioned previously in the thread.

 

[Tempus]

I think he'll get some credit immediately.

Not sure how much, sell the news?

History of tesla product announcements has shown pretty clearly that no matter how "cool" they are, they don't really move the stock price in a positive way. Elon could announce pretty much anything and I don't really see it moving the stock in a concrete way until the street can see backup of the acquisition being financially neutral or positive in an actual financial statement.

I think Dave made that point upthread - it'll probably be at least one or two earnings calls post-merger before the uncertainty around SolarCity dies down.

 

[MP3Mike]

I can see the possibility that they are using a larger number of 18650s, but I will be disappointed if the 21-70s still aren't ready, even in light volume.

However, why develop a variant that will only be in use for about two months? The Gigafactory should be producing significant volume by the end of the year. This is why I hope and believe the products to be unveiled today use 21-70s. If it's using 18650-cells - that could indicate delays at the Gigafactory... If they use 21-70s, that indicates that the Gigafactory may already be producing cells. (I've been paying attention to what's been said by Tesla, and the wording hasn't ruled it out.) Another alternative is that they are shipping in cells from Japan, as has been mentioned previously in the thread.

But they Q3 quarterly update letter says "The Gigafactory remains on track to begin cell production later this year for use initially in our energy storage products and later to support volume production and deliveries of Model 3 in the second half of 2017."

That seems to confirm that it is not yet producing any cells.