Short-Term TSLA Price Movements - 2016

[Johan]

I agree. Very often EM seems not to understand (or care) that "people" don't understand (or care) about the inherent logic of a decision, but especially about money/finance (as @DaveT emphasized). He always forgets that people (analysts, especially) don't think like he does.

I personally love that the first slides of every Tesla presentation (look at tonight's letter...) are about CO2 increasing and climate change, but as much as he keeps saying that very few are gonna listen. Tesla (the company) is co-dependent TSLA (the stock), and in the stock market very few are interested about CO2. It seems to me that he keeps forgetting that.

My fear is that he really makes mistakes in this regard (communication, manipulation of SP), and puts Tesla (the merger, specifically) in trouble.

Much of the success of Tesla so far stems from exactly the fact the they do what they for the right/proper/correct reasons as opposed to the things people with influence in the financial sector care about. Short sightedness and a focus on monetary gains are poor drivers of lomg term success. I love the fact that they are keeping their eyes on the price; the transition to global sustainable energy generation and storage and zero emissions transport. Elon does not care about the stock price more than what's needed in order to get things done. Money is not the end game here, it's merely a tool in the tool box.

 

[electracity]

Tesla has inadvertently explained that the reason the merger is a bailout by placing all the emphasis on the new solar roof. If Solarcity had a truly profitable ongoing business the simplest justification for the merger would be to simply grow Solarcity. The new, obviously unfinished, solar roof would be an adjunct to the justification for the merger. Instead the new solar is front and center.

I voted yes for both companies. Not because I believe Musk's reasoning, but because the merger has to be done.

 

[Irishjugg]

But he likes the 'sizzle' of vegetable stir fry?

Yes, comic relief on an otherwise dismal day for longs.

Does no one else get excited on days like these? I love irrational market discounts!

Let's see, 50% CAGR has continued, production run rate is at goals, model S and X are at steady state production, model 3 is temporarily on schedule, powerwall 2.0 is wildly better than any competitors offering, utilities are starting to get capex on battery storage, solar roofs look fantastic, full autonomy hardware already in production and will be standard on model 3, Tesla network is confirmed, model y, pickup, minibus, semi all confirmed, cash flow positive and profitable operation are all here and I get to buy at a significant discount to the normal trading range for when model S was at 800/month run rate and model X wasn't released yet?

Today is a wonderful day if you like making money! The Tesla story has only grown in scope, execution, and value while the price has sunk due to solar industry struggles, macro interest rate of election risk, and your standard not very good analysts not understanding a merger. I love information arbitrage!

Not to mention, what fantastic swing trading! If only I was allowed to trade derivatives, I wonder what Nov 200 calls and currently going for.

Side note, also going long TAN and PBW, I think the time is finally right.

 

[3Victoria]

I think reiterating on the goals of Tesla are important ... at least some investors and customers buy because of those goals ... not everone one is simply out to make a buck ---- however, that argument likely does not apply to analysts

 

[racer26]

The only thing I thought had some real meat on it was the cutting out the middle men part. The rest of it seemed pretty weak. OK, glass is cheap, but what were the other people using? A better statement would have been, "past cells used material x, which costs twice as much per pound as our tempered glass."

The other items to me just sound like tangentially related items to the question thrown in there to sound like an answer. They don't really say how that makes them better than past products. I have seen pictures of other products, but that's it. As a somewhat stereotypical mechanical engineer, aesthetics are very difficult for me to assess. I'm kind of a function over form type of guy. That being said, the products revealed on Friday do look nice. I don't even begin to claim to be able to put a value on that "nice" though.

The aesthetics of solar panels stuck on your roof have been a HUGE barrier to entry for a lot of people. Many people are simply unwilling to stick gaudy panels on their roof. They are proud of their house, and want it to look good. Tesla Solar Tiles are the first solar product at any price point that doesn't require you to compromise on aesthetics.

 

[Ichabod]

"Dow failed at selling solar roofs so Tesla will also fail" is in the same vein as: "GM tried to sell the EV-1 but failed, how can Tesla possibly think it can sell electric vehicles"? It is a silly argument.

It's not exactly the same. It is obvious that a Model S or X is not an EV-1. The basic specs show that. For these solar products on the other hand, it's not clear what exactly differentiates the Tesla product from past products, other than their visual appearance, which as Elon explains, is nothing but some cheap materials and printing.

 

[Gtoffo]

I'm of the opinion that unless there is some phenomenal volume that most or all after hours trades are small, retail investors.

Mike

Small volume = cheap manipulation

If I'm a fund short BIG, spending a tiny fraction of my position simply to drive the narrative "the market reacted poorly" to the CC is a no brainer.

That would explain why SCTY is down MORE than TSLA.... cheaper to do that way and sentiment regarding one will spill over into the other. It makes no sense that the arb between the two stocks is increasing at this moment.

 

[Ulmo]

2. Have you seen the Dow solar shingle that was discontinued that people keep pointing to as an example of how its been tried before and failed, and seen Tesla Solar Tiles? They're not even kind of in the same league on aesthetics. Elon is 100% correct - they sold like garbage not because they were bad at being solar panels, but because the interconnecting wasn't well thought out and therefore expensive to implement, and because they were ugly.

I followed some of the roofing solar products long ago when the solar cell market was young, the efficiencies were low, and the costs were high. Rive's comment that the other attempts didn't even try to succeed on controlling ballooning costs due to multiple partners explains a lot of what I used to see. What I saw in previous solar shingle companies was completely baffling: they'd come up with excuses that a 5 year old would say are dumb. You know how sometimes small outfits suck up innovation and then spit out nothing? It happens quite regularly. Sometimes I suspect ulterior motives -- patents being bought up by competitors, and such. Sometimes it might just be that the principles didn't have enough cash, or didn't have the teams that they require, or had a lack of insight into all aspects of the businesses. But this time, it almost doesn't matter: the juggernaut that is Tesla will find a way to make it work with their engineering skills and full in-house teams. That's what you get when you have real money behind an engineering CEO at a productive profitable company (and the difference between large profitable companies with an engineering CEO and companies with an MBA CEO).

It's not exactly the same. It is obvious that a Model S or X is not an EV-1. The basic specs show that. For these solar products on the other hand, it's not clear what exactly differentiates the Tesla product from past products, other than their visual appearance, which as Elon explains, is nothing but some cheap materials and printing.

The differentiation between past products and the Tesla product is that the Tesla product is nothing but some cheap materials and printing. There is more to it, but past products attempted to be these super materials that didn't perform well. You should have seen some of the efficiency numbers: 1%, 2%, 6%. Glass, on the other hand, is a simple material. And, here, they're getting efficiencies of near 20%, and possibly much, much more. Tesla Glass is not the same product line as these prior attempts, at all.

Remember the Model X? It has a huge amount of glass in its roof. Tesla dumped lots of engineering into that stuff. Well, now they have expertise. Remember the problems with Model X gaskets on the doors? They're now getting gasket expertise. Similar engineering efficiencies with other parts of the designs can be used in the larger company.

 

[racer26]

Does no one else get excited on days like these? I love irrational market discounts!

If by excited, you mean furious that I was 100% correct that this call had nothing but great news, confirming everything we suspected about why the merger is a good idea, and the market STILL reacts negatively. I am now seriously doubting whether the calls I bought this afternoon will turn out green. Which is *insane*. We lose nearly 3% in regular trading, get good news at market close, and drop another 3%.

 

[3Victoria]

It's not exactly the same. It is obvious that a Model S or X is not an EV-1. The basic specs show that. For these solar products on the other hand, it's not clear what exactly differentiates the Tesla product from past products, other than their visual appearance, which as Elon explains, is nothing but some cheap materials and printing.

First they will be more efficient* than all other solar cells, second they look good, and third they should be cost effective.

Good function and good aesthetics make an excellent product (eg Apple products).

* - Both SC and Panasonic have excellent cells ... the cells combining their technologies will be better again. In addition they will be made in NA --- no duties. The cells can compete of price and efficiency. The tiles will make them acceptable to a much wider audience.

 

[electracity]

Backing skeleton structure, like snapping in a light bulb - there's your answer for how the interconnecting works.

The backing structure may be mechanical, not electrical. It looks to me like the male conductors plug into female receptacles in the tile above:

 

[Irishjugg]

Of course it is rosy and wonderful! I wouldn't expect them to say anything else.

"SolarCity obtained about $1 billion in project financing since July 1, 2016, demonstrating the strength of its financial condition"

When is SolarCity going to release Q3 results so the market can understand the strength of financial condition and execution?

In a week

 

[CALGARYARSENAL]

Darn it! Now I have to spend the night trying to convince the wife to buy more shares. It ain't going to be easy! Gotta wipe the pie off my face first.

 

[Turing]

I agree. Very often EM seems not to understand (or care) that "people" don't understand (or care) about the inherent logic of a decision, but especially about money/finance (as @DaveT emphasized). He always forgets that people (analysts, especially) don't think like he does.

I personally love that the first slides of every Tesla presentation (look at tonight's letter...) are about CO2 increasing and climate change, but as much as he keeps saying that very few are gonna listen. Tesla (the company) is co-dependent TSLA (the stock), and in the stock market very few are interested about CO2. It seems to me that he keeps forgetting that.

My fear is that he really makes mistakes in this regard (communication, manipulation of SP), and puts Tesla (the merger, specifically) in trouble.

There is solid rational for doing this. Global trends are heading for more climate change awareness and action. Just today China made a rare but insightful public comment on our election:

China on Tuesday rejected a plan by U.S. Republican presidential candidate Donald Trump to back out of a global climate change pact, saying a wise political leader should make policy in line with global trends, a rare comment on a foreign election.

The world is moving towards balancing environmental protection and economic growth, China’s top climate change negotiator told reporters, in response to a query on how China would work with a Trump administration on climate change.

“If they resist this trend, I don’t think they’ll win the support of their people, and their country’s economic and social progress will also be affected,” Xie Zhenhua said.

“I believe a wise political leader should take policy stances that conform with global trends,” China’s veteran climate chief said.

 

[drinkerofkoolaid]

Just a guess. Tesla and SolarCity intentionally didn't elaborate on SolarCity's technology because the information provided is more than enough to prove that the merger makes a ton of sense. Additionally, it's more than enough to invalidate the illogical views being used by those attempting to sue to block the merger.

Also, analysts will have all the time needed to ask questions about other specifics tomorrow.

There is absolutely nothing negative in the release, and there is no logical reason both stocks are down after hours. The reasoning I mentioned in my last post is basically the reasoning provide in the filing, in addition to some positive things I didn't consider. The merger is an excellent idea and anyone who thinks otherwise is wrong. Believe whatever you want.

Rational 1) It makes strategic sense.

Rational 2) It makes financial sense.

Rational 3) Climate Change is real and very serious. The merger allows both companies to tackle climate change swiftly and efficiently, make a nice profit in the process, and create a ton of jobs.

Rational 4) Any politician who wants to be taken seriously want to support legislation that will create problems for the only company positioned to get the USA and probably the world to 100% renewable? Much easier to get things accomplished when it's one company.

 

[CALGARYARSENAL]

Just a guess. Tesla and SolarCity intentionally didn't elaborate on SolarCity's technology because the information provided is more than enough to prove that the merger makes a ton of sense. Additionally, it's more than enough to invalidate the illogical views being used by those attempting to sue to block the merger.

Also, analysts will have all the time needed to ask questions about other specifics tomorrow.

There is absolutely nothing negative in the release, and there is no logical reason both stocks are down after hours. The reasoning I mentioned in my last post is basically the reasoning provide in the filing, in addition to some positive things I didn't consider. The merger is an excellent idea and anyone who thinks otherwise is wrong. Believe whatever you want.

Start pouring the koolaide cuz we longs be real thirsty! Reeeeeeeeal thirsty.

 

[AudubonB]

I absolutely have to re-listen to the CC but I'd like someone to confirm what my ears heard:

===> the TE roof tiles are NOT normal tempered glass but are automobile glass. <====

If this is true, then two important points immediately come to mind:

1. Those who have been surmising that the in-glass louvers discussed in the PV tiles may be correct in their thinking they will make their way to the Model 3 windshields and possibly other windows. For HUD activities, for window blacking, and more.

2. However.....

...at Friday's Universal Studio's reveal, we heard that the tiles were made out of "quartz glass". That means SiO2 as opposed to sodium-lime (still mostly silicate but also about 22-27% MgO, CaO and esp. Na2O). On the other other other hand, though, we don't know exactly what he means by "quartz" - the lab chemist in me doesn't think he means pure fused silica, because I remember the concept of "affordability" also was playing a part....

Please feel free to chime in while I try to re-listen.

 

[Johan]

Times like now can be very frustrating. I know this is the short term thread, but bear with me for just a moment and consider this very basic argument, and see if you can really fault it:

We are facing a huge global challenge: global warming. To simplify the argument let's assume there are two possible futures:

A: A future where humanity as a whole does not suceed in a transition to sustainable energy generation, storage, transport, production but remain on the current trajectory of adding CO2 to the atmosphere with further increased global warming as result.

or

B: A future where the transition is sucessful and we break out of the current trajectory.

Now assume that in future A further economic growth will first stagnate and then there will be a huge economic downturn for the global economy because of the huge ecological impacts of climate change, civil unrest etc. In future B global economic growth can continue on its historic exponential growth curve.

Now assume you are a rational agent operating in the economic reality and assume that your only goal is to maximize the future growth of your capital. And assume that evidence is growing every year and every day that the A/B scenario described above is actually true. In this situation it is a true no-brainer to only invest in companies, efforts, technologies that work toward future B - both because this maximizes the probability of growth of your capital and because it increases to probability of future B occuring as opposed to future A. The most interesting part of the argument is that even if you for some reason think that future A is more likely to occur, it still makes no logical sense to invest according to this likelihood since even if future A is what takes place it doesn't matter that you "made the correct bet" - your capital will wither away due to the shrinking global economy anyway. So however you assign probabilities the only rational thing to do is invest in ventures that facilitate future B and at the same time will be the companies that stand the most to gain from future B occuring.

Big money in general is smart money, and they know this. The rest is just noise and rent-seekers picking our pockets (i.e. if we let our selves get caugt up in the noise).

 

[racer26]

There is solid rational for doing this. Global trends are heading for more climate change awareness and action. Just today China made a rare but insightful public comment on our election:

China on Tuesday rejected a plan by U.S. Republican presidential candidate Donald Trump to back out of a global climate change pact, saying a wise political leader should make policy in line with global trends, a rare comment on a foreign election.

The world is moving towards balancing environmental protection and economic growth, China’s top climate change negotiator told reporters, in response to a query on how China would work with a Trump administration on climate change.

“If they resist this trend, I don’t think they’ll win the support of their people, and their country’s economic and social progress will also be affected,” Xie Zhenhua said.

“I believe a wise political leader should take policy stances that conform with global trends,” China’s veteran climate chief said.

Reminds me of some things John Oliver has had to say about lists of countries the US shouldn't want to be on (Places with the death penalty), and when countries like Iran are calling the US out on human rights abuses (re: Guantanamo Bay).

Honestly: Trump winning the election is basically the apocalypse incarnate.

 

[techmaven]

The only thing I thought had some real meat on it was the cutting out the middle men part. The rest of it seemed pretty weak. OK, glass is cheap, but what were the other people using? A better statement would have been, "past cells used material x, which costs twice as much per pound as our tempered glass."

The other items to me just sound like tangentially related items to the question thrown in there to sound like an answer. They don't really say how that makes them better than past products. I have seen pictures of other products, but that's it. As a somewhat stereotypical mechanical engineer, aesthetics are very difficult for me to assess. I'm kind of a function over form type of guy. That being said, the products revealed on Friday do look nice. I don't even begin to claim to be able to put a value on that "nice" though.

They did a terrible job on this aspect. First, there are the two solar shingle products most people talk about, since they are from big companies:

Solar
DOW POWERHOUSE™ Solar Shingle

Dow is using CIGS from NuvoSun which tops out at 14% efficiency. The Certainteed Apollo II system uses monocrystalline with a conversion efficiency of 14.7%. The CIGS one likely tolerates heat reasonably well, but the mono cell product will drop dramatically in heat.

That's why most of the "experienced" solar installers dismiss the idea of a solar roof. They expect them to be expensive and the real world performance on them is terrible. Plus, none of them look any good. Matter of fact, they look terrible:

Now, the Silevo technology has high efficiency, and very importantly, has high efficiency even when very hot. Starting at 21% efficiency and only -0.22%/C temperature coefficient, it is half the temperature coefficient of the Certainteed monocrystalline cells. That means 70 degrees celsius, where the other two have likely less than 10% efficiency, the Silevo technology is still able to deliver over 20%. Add in the 2% overhead for the micro-louvers, and we're still talking 18%, which is higher than the STC rating of your typical Chinese cheap poly panel (16%). Hence the Silevo cells will outperform your cheap poly panel even without the cooling airflow underneath them.

If Tesla/Solarcity can deliver on price... this should be a big win. Remember, the installation of the roofing and the installation of solar is right now completely separate by different installers. If the installation of Tesla/Solarcity's solar roof is less than the two combined, that's a win. Also, traditional rooftop solar needs to have pretty expensive racking. That's built into the product. There's still a lot of details, but you can see why solar installers poo poo solar roofs since their experience is with non-Tesla product. And since Tesla is interested in mass volume, they are willing to price this product correctly. That hasn't been the case thus far with anyone else.