Short-Term TSLA Price Movements - 2016

[Ovulation]

What happened to Elon's oft-made promise of driving free on sunlight?Remember when the whole supercharger network was going to run on solar and batteries? Solar canopies at each charger site? What happened?

Just wait, it will happen in Elon-Time

 

[Roger t]

@dennis Since you asked for critical feedback, I'll give it a shot.

Autos have proven to be low-margin, cut-throat businesses. This is why auto makers have such low P/E multiples. It takes a ton of capital to scale and when a recession hits it's difficult to scale back without a lot of losses. And the overall auto market isn't growing much and will likely shrink due to ride-sharing and eventually autonomous cars. So, with autos we might see a shrinking overall market in terms of number of autos sold. Tesla might be a rising star in the auto market, but it might not be that exciting if the overall market for autos is shrinking. Tesla needs to find a way to reinvent the business model in autos (ie., transportation as a service), but they have yet to have done that.

With solar, it's also proving to be a low-margin, cut-throat business. Companies are having a difficult time surviving. And now Tesla wants to enter this field. They'll have their work cut out for them.

With battery storage, it seems like a huge and open field. But what's stopping battery storage from becoming a low-margin, cut-throat business (with low P/E multiples) like autos and solar? Tesla's battery storage system tech can be copied, and other companies will gain similar advantages to GF as they scale production. Sure, Tesla might produce more with the GF and have a lower cost, but that cost gap will likely decrease over time as competition becomes more intense. What Tesla really needs is a true technological breakthrough in energy storage. They don't have that yet.

Regarding competition, you mention startups and large auto markers. But I think the real competition is likely going to come from large tech companies, like Google, Uber, Apple, Nvidia, etc. They will provide tech such as autonomous driving to auto makers, and that's how auto makers will bridge the gap with new tech such as autonomous driving. LG Chem and others will provide batteries at competitive costs and can even help with powertrain expertise as well. Sure, it looks like Tesla has an unsurmountable lead right now in EVs, but that gap will likely close over time.

And even if Tesla sells as many cars as BMW or Mercedes, that doesn't mean TSLA will appreciate that much in value (ie., 2x?). Look at the market caps of BMW and Mercedes. Tesla needs to give investors something more than just a typical auto maker business if they want higher multiples. Again, perhaps they can lead the transportation as a service industry... but again Tesla has to prove itself in that arena.

Anyway, I'm super bullish on Tesla long-term but it's not because I like the auto making business, solar business, etc. And not because I like Tesla's current competitive advantages (I think Tesla needs to accrue better and more defensible competitive advantages). But I see a credible path for Tesla to reinvent the business model in autos and I also see a credible path for Tesla to reach a true breakthrough in energy storage w/in the next 10 years. If they can do that, we can talk about Tesla becoming the most valuable company in the world.

You can't compare Tesla to today's low PE auto makers to predict Tesla's future value. GM used to be US's most profitable company and enjoyed more than 10% profit margin. It eventually doomed by technology stagnation and globalization. Tesla's long term value lies largely in how it transforms auto sector as a technology company. So it is great news "real competition" from other technology companies like Google and Apple has diminished significantly recently. Market didn't notice at all because wall street believes Tesla is no different from other automakers.

 

[winfield100]

I suspect that the cost of putting up canopies for the solar panels was too high - solar may be cheaper than electricity from the utility, but canopy+solar may not be. Furthermore, Tesla does not own or even lease the land for many of the superchargers, but simply has agreements in place with the owners to allow them to install superchargers there - this is usually a good deal for the owners, as it drives more customers to their premises nearby. However, I imagine that many land owners would be reluctant to have Tesla install canopies.

consider 3 points
1) time is what keeps everything from happening at once (be patient young jedi)
2) with a sucessful merger of SCTY and TSLA you get TEnergy overwhelming, faster
3) this allows PowerPacks, Powerwalls, PV arrays to become geographically localized VPP's to bleed off excess to superchargers
YMMV
however, this is short term thread and above may be longer term vision

 

[viKtor slamet]

We lost too many good folks already because of blind bull got butthurt when there is an argument that sounds slightly cautious. Hope not gonna lose @DaveT. Thankfully I got his google hangout.

 

[drinkerofkoolaid]

Where are the articles about the Superchargers coming from?

Elon said this months ago. This is not new information.

Also, he emphasized that it would be more of a symbolic fee to prevent overuse and cover some of the cost of the Superchargers, and would still be a lot less than filling up a gas tank.

 

[SunCatcher]

What happened to Elon's oft-made promise of driving free on sunlight?Remember when the whole supercharger network was going to run on solar and batteries? Solar canopies at each charger site? What happened?

Some of us, MANY of us, are driving essentially free on sunlight. From the roofs of our homes. Our own home rooftop produces so much electricity it's ridiculous. Being on the grid, a good deal of what we produce goes to the neighbors, and we get credited for night time use, etc.

The Gigafactory will eventually be powered with renewables. We are still in process of getting down the road to reach these goals. As Al Gore so cleverly put it, at some point ice will warm that final degree, and turn to water; and then the rivers of PV energy will be flowing as wild as the Zambezi in the rainy season. We all need to stay on course. Tesla, under the leadership of Elon Musk, will stay the course, and the promised goal will be reached. When the time comes, all the King's horses, and all the King's men will be unable to hold back the river.

Patience. All good things come to those who wait.

 

[Rockster]

Well, I specifically addressed that in my post. I agree it will not be a profit center for many years as the network continues to build out - what happens when they are finished building out in the distant future, at a time when cheap solar + storage is installed at every supercharger and is generating basically free juice after initial install costs?

Are they going to reduce the cost of supercharging back to basically 0 once this occurs? Sure, that's a possibility I guess - but I'm going with the more likely possibility of them keeping the rates the same after the buildout is finished or otherwise substantially slowed down from current rates. If you agree, then the logical conclusion is that they can become massive profit centers.

You're right that there's a point where they've crossed the point into profitability and then what? They:

1. Stop building out and start making a profit (in conflict with their promise).
2. Stop building out and make supercharging free again (unlikely because that would return us to a problem with squatters who clog the superchargers, just like we have today).

So, that means that must continue building superchargers, in perpetuity, until the planet is consumed in a grey goo scenario, only by superchargers, not nanobots.

 

[MP3Mike]

You're right that there's a point where they've crossed the point into profitability and then what? They:

1. Stop building out and start making a profit (in conflict with their promise).
2. Stop building out and make supercharging free again (unlikely because that would return us to a problem with squatters who clog the superchargers, just like we have today).

So, that means that must continue building superchargers, in perpetuity, until the planet is consumed in a grey goo scenario, only by superchargers, not nanobots.

or option 3: As the network matures they lower the cost of charging to keep with the cost of electricity and maintenance.
or option 4: They use the money to go back through and replace all of the 135kW charges with 300kW chargers. Lather/rinse/repeat.

 

[esk8mw]

You're right that there's a point where they've crossed the point into profitability and then what? They:

1. Stop building out and start making a profit (in conflict with their promise).
2. Stop building out and make supercharging free again (unlikely because that would return us to a problem with squatters who clog the superchargers, just like we have today).

So, that means that must continue building superchargers, in perpetuity, until the planet is consumed in a grey goo scenario, only by superchargers, not nanobots.

I realize you are joking here, but I do want to point out that it would be a little insane to fault Tesla if the result of them doing too good of a job is that they "break promises."

Tesla: "Supercharging costs are not designed to be a profit center."
Tesla builds so many superchargers that no more are needed and builds solar+storage solutions that dramatically reduce the cost of generating electricity. Cost remains static.
Hypothetical Tesla Critic (not you, Rockster): "Tesla broke its promise!"

Tesla: "Our service centers are not designed to turn a profit."
Tesla someday builds cars that are so reliable they almost never need service aside from tires. A sizable chunk of Tesla buyers still purchase the Service Plan as an insurance policy even though they never end up using it. Service Centers end up making a profit.
Hypothetical Tesla Critic: "Tesla broke its promise!"

 

[Papafox]

If you check out the attached image, you'll see that TSLA sunk to slightly-in-the-red by 9:38 this morning, before recovering. it took about 140,000 shares to sink TSLA from opening bell to slightly in the red if you click on the NASDAQ real-time chart and count up the trading, minute by minute. Interesting, the selling was concentrated at 2 minute intervals. When you consider that there are more than 30 million short shares outstanding, this was a small price for "Insurance" to avoid a runaway TSLA stock price on Monday opening. As you know, the amateur hour on Mondays can be quite active buying, and with the lead-in of TSLA climbing into the close on Friday, with the low price, and with election news that favors TSLA over the weekend, TSLA could have done another of those near-vertical climbs after the opening bell and panicked the weaker shorts into buying to close if someone hadn't put on the brakes.

If the shorts who sold on the opening bell this morning wish to reload, they'll need to buy in again during the next day or two. They may not be able to do so profitably this time around, but they have profited by "capping" behavior by selling at the top and then being in a position to buy in lower once the SP began to fall, many times before.

The big question is not whether there's manipulation by shorts at present, the question is what's their exit plan? Unless deep pocket oil companies are doing the shorting in a malicious effort to deprive Tesla of an equity raise, how do the really big shorts extricate themselves from this situation without losing money, or at least while minimizing the loss of profits? Do they even plan to take profits now, or are they settling in for the long-run, hoping that their constant manipulations prevent TSLA from running much higher before the next black swan enters the picture? I suspect if they try the long-term strategy it is going to prove very expensive at some point because we're going to reach a point where the big institutions see too much promise with TSLA at these prices are start buying. That day will come sometime after the merger is completed, methinks.

Edit: If you look at TSLA's trading this afternoon, you will see prolonged horizontal trading, first in the 193.30 area and now in the 193.00 area. It is unnatural for a volatile stock like TSLA to trade horizontally for prolonged periods of time. Someone is capping the stock, at present, selling just the needed shares to keep the stock price level. If a big investor was trying to divest of shares, they would not be selling exactly the right number of shares to keep TSLA level. Rather, they would allow TSLA to rise and then start selling at the higher price.

 

[viKtor slamet]

View attachment 201592
If you check out the attached image, you'll see that TSLA sunk to slightly-in-the-red by 9:38 this morning, before recovering. it took about 140,000 shares to sink TSLA from opening bell to slightly in the red if you click on the NASDAQ real-time chart and count up the trading, minute by minute. Interesting, the selling was concentrated at 2 minute intervals. When you consider that there are more than 30 million short shares outstanding, this was a small price for "Insurance" to avoid a runaway TSLA stock price on Monday opening. As you know, the amateur hour on Mondays can be quite active buying, and with the lead-in of TSLA climbing into the close on Friday, with the low price, and with election news that favors TSLA over the weekend, TSLA could have done another of those near-vertical climbs after the opening bell and panicked the weaker shorts into buying to close if someone hadn't put on the brakes.

If the shorts who sold on the opening bell this morning wish to reload, they'll need to buy in again during the next day or two. They may not be able to do so profitably this time around, but they have profited by "capping" behavior by selling at the top and then being in a position to buy in lower once the SP began to fall, many times before.

The big question is not whether there's manipulation by shorts at present, the question is what's their exit plan? Unless deep pocket oil companies are doing the shorting in a malicious effort to deprive Tesla of an equity raise, how do the really big shorts extricate themselves from this situation without losing money, or at least while minimizing the loss of profits? Do they even plan to take profits now, or are they settling in for the long-run, hoping that their constant manipulations prevent TSLA from running much higher before the next black swan enters the picture? I suspect if they try the long-term strategy it is going to prove very expensive at some point because we're going to reach a point where the big institutions see too much promise with TSLA at these prices are start buying. That day will come sometime after the merger is completed, methinks.

Edit: If you look at TSLA's trading this afternoon, you will see prolonged horizontal trading, first in the 193.30 area and now in the 193.00 area. It is unnatural for a volatile stock like TSLA to trade horizontally for prolonged periods of time. Someone is capping the stock, at present, selling just the needed shares to keep the stock price level. If a big investor was trying to divest of shares, they would not be selling exactly the right number of shares to keep TSLA level. Rather, they would allow TSLA to rise and then start selling at the higher price.

Dear Dairy, shorts bully me again today..

 

[WarpedOne]

There is negative value (i.e. damage) in empty critique.

Show me where my bull thoughts are wrong. I will thank you. Twice. Just don't waste my time and energy with empty and stupid drivel how mercedes can build thousands of long-range EVs tomorrow. Or how Uber can buy itself a huge fleet of autonomous cars. Or how one can do this or that.

The critique and praise, both have to endure the math where 100.000 is one hundred times bigger than a 1000. And one hundred times more important. And just please, recognize we have been listening to the same old 'empty critique' for 10 years already.

Thank you kindly.

 

[TMSE]

Since this is the investor thread I want to point out that paid supercharging, while it will not be a profit center initially, will be eventually.

This is a brilliant move. Basically, owners will begin financing the supercharger expansion soon. I assume it will be priced so they will break even on future expansions. However, at some point in the distant future, no more superchargers will be needed in the world. At that point, it's all pure profit for Tesla (on 20,000 superchargers worldwide or whatever). Given the cheapness of electricity--and their ability to generate it even more cheaply with solar + battery--I predict this will be a massive income stream some day.

Oh yea, and this allows them to reduce the base price on the S/X by 2k if they choose to and increase demand further as production capabilities improve. If they choose not to reduce the price, well, then they are double-dipping and collecting even more profit. No bad news here for investors or for enthusiasts who live outside the current supercharger network.

Great comment!

With this changed SC business model, Tesla can install SC in densely populated urban areas. Most people care about the convenience of SC, not the cost when Tesla is charging them close to wholesale rates for the kWh used. Even the Capex on these SCs can be much lower as businesses vie to get these Tesla customers by having these chargers on their property. Even a tiny bit of markup would result in sizable profits. Not a profit center for now, not untill maybe 2020. But, a huge cash cow later.

 

[Papafox]

Dear Dairy, shorts bully me again today..

OK ViKtor, your turn. Please offer a reasonable explanation for today's trading: the opening drop in prices, the underperformance of TSLA compared to the NASDAQ (when TSLA's clean energy emphasis should have resulted in an overperformance by TSLA), and the curious horizontal trading this afternoon. What do you think happened to the 200,000-300,000 shares to short that Fidelity parted with today? How do you think the shorts deployed these shares? Evenly and slowly, so as to not to adversely affect the longs? Please include sufficient details to back up your thesis.

PS: If we close between 192.95 and 192.99, would that mean anything to you?

 

[Intl Professor]

Given the anticipated demand for Teslas as the M3 and subsequent motor products accelerate, one can foresee a large number of supercharger "snakes" at each site. That would require for solar powering very large arrays to capture energy. Unlikely Tesla would build these alone, but one could also hope locations would cover their entire parking lots with arrays. Of course, fewer cars will be used so parking lots can be reduced in size as Tesla's ride sharing service matures.

 

[WarpedOne]

With this changed SC business model, Tesla can install SC in densely populated urban areas.

With this move tesla eliminated any and all future 'independent' charging networks that would finance themselves solely with selling energy.

Tesla 'promised' to charge you only for electricity and operation-cost, at zero profit. No business can survive on this terms without some other profit revenue.

Future charging networks are thus limited to businesses that profit from other things and offer 'super' charging as a marketing to promote their core business.

Or to put it the other way: Tesla's future competition just got even smaller.

 

[Johan]

The 400 kWh included every year is very much something symbolic, something that for the majority of users creates a continued sense of fairness in charging $2k (or whatever it will be with Model 3) to enable supercharging (as the blog post says: "the hardware is included with all cars", but not the actual supercharging) but at the same time your weeding out those who were planning on really getting their $2k worth (in the the form of hogging local SCs). Now, please note that I think it will be unlikely for Tesla to offer a $0k but 0 kWh included SC enabled option. Good news for investors and over all a fair move IMO.

 

[aubreymcfato]

To the Europeans: few weeks ago I wrote to my bank (via helpdesk) to ask about the merger. They came back to me after few days with this for form, asking me to vote and sign before November 1,
so that they could have the time to send it back to Tesla. Hope it's useful.

 

[aubreymcfato]

Liam Denning continues to write doubtful articles about Solarcity:
Overcoming SolarCity's Language Barrier

 

[Turing]

It really depends on how adjustable the machines are. 18650 to 2170 is a very small change so a large percentage of an existing line might be able to adapt. On the other hand they are likely going to want the newest and fastest machines available so probably everything other than maybe slurry mixers might be replaced.

Seems like this is a significant unknown. If Panasonic can relatively cheaply update old 18650 lines now that they have the 2170 standard worked out for the gigafactory, that means Tesla could see cell efficiency/cost improvements go into model s/x in 1H 2017?