Short-Term TSLA Price Movements - 2016

[maoing]

Elon Musk has to defend TSLA in tomorrow ER/CC, he needs to give bullish guidance at least (even might miss later on). Otherwise he can't afford to see both SCTY and TSLA dropping like rock and his ambition for those two companies might be just over. Without high SP --> no fund raise --> no gigafactory --> no model 3, then TSLA only worth less than $100。So it's Elon and investors' gamble tomorrow, we shall see either low 120 or 170。Which side you choose?

 

[AudubonB]

The World Is Not Running Out Of Storage Space For Oil | OilPrice.com
I estimate that it is paying over $40/b for incremental capacity. If that is sufficient to build out the capacity, then in theory there is no real risk that the world could run out of capacity.

That is a really tough number to crack. Remember that it is a hard, non-consumptive product - one can use that barrel of storage again and again, ad infinitum (many years, anyway).

 

[FredTMC]

In this environment, is it even possible for Tesla to have a positive response to its earnings outside of a major unexpected event like Q4 CF positive (yes, I know this is basically impossible)?

- deliveries are baked in for Q4
- cash spend will be high, as promised, which freaks people out right now
- FCF positive Q1 is expected at this point, any deviation will punish the stock
- Guidance has to be super high, 50%+, or there will be a 20% kick in the face
- if super high guidance is given, it may not be believed based on history of downward revisions
- I don't think reassurance on X ramp will help much

Basically, the market right now wants super high growth but spending money to foster such growth is frowned upon. There is no such thing as a relief rally right now. The market does not appear to care how much a stock has already been hit or the extent to which bad news for tech stocks is already "priced in." I don't see how we win here.

Disclosure - I'm still super long with no protection - shares, short short-term puts and J17/J18 calls. I'm thinking of exiting all options positions at MASSIVE losses tomorrow, even as SCTY drags down TSLA to sub-$140 prior to earnings. I won't go short, though.

Wow. I completely agree with ALL your points.

I think Tesla/TSLA does have some room to do okay on the call tomorrow (not get crushed)

1). Affirm on track for FCF positive in Q1. Remember, Elon said this was an aspiration for Q1 during last call. What changed since then? Macro collapse. So, tesla will slow spending of CapEx in Q1 to enable positive FCF. CapEx is "discretionary" spending. They have seen the market collapse, they know the street wants to see end of cash burn. Also, Deepak said last CC that CapEx will be less in 2016 v 2015.

2). Strong guidance for 2016. 85K min. That's not unbelievably higher than expected. It's Plausible

3). Strong guidance (top and bottom) for Q1. Remember that Q1 ain't over yet and just because TM may be slow ramp so far on MX, the production on MS fills the gap. It's ONE assembly line for BOTH cars. Less MX means more MS

4). Elon LOVES to squeeze shorts. Loves it! Remember the words "Tsunami of hurt" he used years ago? He would love to squeeze the non-believers. It's personal

 

[ev-enthusiast]

Today's drop of SolarCity after this extended New Years drop is not normal.

 

[jesselivenomore]

Today's drop of SolarCity after this extended New Years drop is not normal.

SCTY's business model is even more reliant on access to the capital markets than TSLA. The market is signalling very clearly how it will value these companies in the current tight capital environment. SCTY is pricing in the risk that the capital it needs to sustain its business will not be readily available.

 

[uselesslogin]

You all may be interested in this:
Production deliveries have begun

 

[Oil4AsphaultOnly]

Is it just me, or is the whole macro environment just a huge over-reaction to china and oil? The price of oil is down due to _deliberate_ over-supply by Saudi Arabia, NOT reduced consumption due to global recession. So if europe is recovering, and China's market is simply maturing (5% growth is pretty good for the 2nd largest economy in the world - $10 trillion in 2015), then isn't there a false correlation between oil prices and a global recession? Aren't we in the midst of decoupling oil from energy consumption?

If my thesis is right, and this is a bear-market in momentum only, then a reversal should be expected as soon as people realize there isn't an economic meltdown pending. When can we expect the light-bulb to turn on? Or are there recession indicators that I've missed? Aside from oil, and China's manufacturing sentiment being slightly below 50, what else is there?

 

[anticitizen13.7]

I'm making popcorn in advance of tomorrow's earnings release. If it's anything like SCTY today, there will be lots of drama and stuff going to hell.

No wonder Elon hated Tesla and Solar City going public. Every quarter he has to deal with this :cursing: from Wall Street dummies. Maybe he should let me be on the Conference Call just once so that I can go "Donald Trump" on Trip or some other analyst who decides to waste time with inane questions. Can you imagine the look on some of these peoples' faces if I repeatedly called them "stupid" or said they were bleeding all over the place? :love:

Anyways, I am most looking forward to production numbers, and Model X ramp progress in particular. I am less concerned about margins, as those are likely to take some hit from the process of getting Model X up to speed. Secondarily, I am also looking forward to updates on Tesla Energy and Power Pack sales (I don't care much about the Power Pack right now).

 

[stealthology]

Wow. I completely agree with ALL your points.

I think Tesla/TSLA does have some room to do okay on the call tomorrow (not get crushed)

1). Affirm on track for FCF positive in Q1. Remember, Elon said this was an aspiration for Q1 during last call. What changed since then? Macro collapse. So, tesla will slow spending of CapEx in Q1 to enable positive FCF. CapEx is "discretionary" spending. They have seen the market collapse, they know the street wants to see end of cash burn. Also, Deepak said last CC that CapEx will be less in 2016 v 2015.

2). Strong guidance for 2016. 85K min. That's not unbelievably higher than expected. It's Plausible

3). Strong guidance (top and bottom) for Q1. Remember that Q1 ain't over yet and just because TM may be slow ramp so far on MX, the production on MS fills the gap. It's ONE assembly line for BOTH cars. Less MX means more MS

4). Elon LOVES to squeeze shorts. Loves it! Remember the words "Tsunami of hurt" he used years ago? He would love to squeeze the non-believers. It's personal

Just a few notes.
- Analyst consensus deliveries is 70,000. 80k guidance seems impressive to me at this point
- Elon mentioned S production being at 1,000/week in Paris last week, with plans to ramp X to the same level in Q2.
- I think '16 deliveries and their ability not to burn cash this year will be key. Hoping for Easter Egg mystery short squeezer announcement from Elon (def not counting on it).
- I'm also at decent losses for my J17 & J18 Leaps, I'll likely hold these into earnings. I do have a small Mar18 120 Put position as a hedge, which I may increase tomorrow. I may roll my J17's into J18's, not sure yet. Argh.

****'s getting for real.

 

[larmor]

Just a few notes.
- Analyst consensus deliveries is 70,000. 80k guidance seems impressive to me at this point
- Elon mentioned S production being at 1,000/week in Paris last week, with plans to ramp X to the same level in Q2.
- I think '16 deliveries and their ability not to burn cash this year will be key. Hoping for Easter Egg mystery short squeezer announcement from Elon (def not counting on it).
- I'm also at decent losses for my J17 & J18 Leaps, I'll likely hold these into earnings. I do have a small Mar18 120 Put position as a hedge, which I may increase tomorrow. I may roll my J17's into J18's, not sure yet. Argh.

****'s getting for real.

Also: what about data for AP use and number of accidents, amt of damage $, and how that compares to traditional cars without AP. Is there a savings with AP use??!!! Might be interesting to anyone insuring their MS and to insurance companies...

 

[eloder]

- Analyst consensus deliveries is 70,000. 80k guidance seems impressive to me at this point

So you think Model S deliveries will decrease in 2016 from 2015? That seems highly unlikely.

Keep in mind it was 50k Model S alone this past year. They have a healthy 20-26k+ Model X backlog to get through, and even with a very slow ramp they'll be able to clear that up.

Anyways, I don't think the ER will be that bad, but I think the market's reaction will probably be just as horrible as the past month given what happened to Solar City. Market just seems way too irrational for now.

 

[Johan]

Not feeling bullish at all about earnings tomorrow. There seems to be no possible element of positive surprise available to play on for management. Even if they can say guidance holds, Model X is ramping well, demand is sustained, GF on schedule, Model 3 will be revealed (actual car) before end of March... So what? The market will punish the stock in the current climate. There will be hard questions about the need for raising capital before Model 3 starts production, and this need for capital will be hard to deny for management.

 

[ivog]

Is it just me, or is the whole macro environment just a huge over-reaction to china and oil? The price of oil is down due to _deliberate_ over-supply by Saudi Arabia, NOT reduced consumption due to global recession. So if europe is recovering, and China's market is simply maturing (5% growth is pretty good for the 2nd largest economy in the world - $10 trillion in 2015), then isn't there a false correlation between oil prices and a global recession? Aren't we in the midst of decoupling oil from energy consumption?

If my thesis is right, and this is a bear-market in momentum only, then a reversal should be expected as soon as people realize there isn't an economic meltdown pending. When can we expect the light-bulb to turn on? Or are there recession indicators that I've missed? Aside from oil, and China's manufacturing sentiment being slightly below 50, what else is there?

The FED raising interest rates is what's bringing markets down right now not low oil or China. Low oil prices equals cheap fuel for the economy, so that doesn't sound like a reason for a bear market to me. Low oil prices might not be beneficial to oil producers or oil alternatives like Tesla but it should be beneficial to all oil consumers i.e. the rest of the world. I don't believe the FED is going to raise interest rates again though, I think it's more likely they will reverse their interest decision and introduce QE4 within a half year.

 

[uselesslogin]

I'm calling it now. $0.35 non-GAAP and Thursday's close is $118.

 

[Oil4AsphaultOnly]

The FED raising interest rates is what's bringing markets down right now not low oil or China. Low oil prices equals cheap fuel for the economy, so that doesn't sound like a reason for a bear market to me. Low oil prices might not be beneficial to oil producers or oil alternatives like Tesla but it should be beneficial to all oil consumers i.e. the rest of the world. I don't believe the FED is going to raise interest rates again though, I think it's more likely they will reverse their interest decision and introduce QE4 within a half year.

Okay, I'll bite. The FED raising interest rates would be to slow down the economy and keep inflation under 3%. The historical reason for this was that when the economy grew quickly, consumption would increase and commodity prices would go up with it, ergo inflation going up. So generally speaking, the FED raising rates should actually be seen as a positive sign, since it indicates confidence that the economy is growing and inflation needs to be kept in check. With CPI being down, there should be no need for the FED to act. If the FED lowers rates, that would be an indicator of a slowing economy, but we're not seeing that, and unemployment is pretty good to boot. Raising rates would only reduce the amount of capital available to do "work".

I'm pretty sure that's how others would interpret a rate raise as well, so I can't agree that the FED rate is the boogeyman that's scaring everyone.

 

[stealthology]

So you think Model S deliveries will decrease in 2016 from 2015? That seems highly unlikely.

Keep in mind it was 50k Model S alone this past year. They have a healthy 20-26k+ Model X backlog to get through, and even with a very slow ramp they'll be able to clear that up.

Anyways, I don't think the ER will be that bad, but I think the market's reaction will probably be just as horrible as the past month given what happened to Solar City. Market just seems way too irrational for now.
[/COLOR]

- I think Tesla will definitely guide higher than 70K. I got the 70k number from TV today on CNBC; I'd assume the # to be accurate, considering recent analyst adjustments.
- I think it'll be really hard to predict how Wall St will react, even in these uncertain times. Most of the time the market does the opposite of what I or what I think the average person thinks it will do. Seems like a very, very negative sentiment on Tesla recently. I was hoping the market could show some signs of improvement before their ER.

Not feeling bullish at all about earnings tomorrow. There seems to be no possible element of positive surprise available to play on for management. Even if they can say guidance holds, Model X is ramping well, demand is sustained, GF on schedule, Model 3 will be revealed (actual car) before end of March... So what? The market will punish the stock in the current climate. There will be hard questions about the need for raising capital before Model 3 starts production, and this need for capital will be hard to deny for management.

- Isn't it possible for Tesla to be FCF+ for Q1 and Q2 at least? Maybe Model 3 reservations and beginning Q2 with ~full production of 1,600-1,800 cars/week can get them there and then some? I'm not an expert on their financials and how they'll structure their Model 3 and Gf investments this year, but do any of you think it's possible Tesla can exit 2016 with a higher cash balance?

 

[jesselivenomore]

Okay, I'll bite. The FED raising interest rates would be to slow down the economy and keep inflation under 3%. The historical reason for this was that when the economy grew quickly, consumption would increase and commodity prices would go up with it, ergo inflation going up. So generally speaking, the FED raising rates should actually be seen as a positive sign, since it indicates confidence that the economy is growing and inflation needs to be kept in check. With CPI being down, there should be no need for the FED to act. If the FED lowers rates, that would be an indicator of a slowing economy, but we're not seeing that, and unemployment is pretty good to boot. Raising rates would only reduce the amount of capital available to do "work".

I'm pretty sure that's how others would interpret a rate raise as well, so I can't agree that the FED rate is the boogeyman that's scaring everyone.

The FED did not raise interest rates because of inflation going up or that the economy was growing too quickly, inflation is non-existent and commodity deflation is prevalent. It raised interest rates because it if it didn't, it will be stuck at 0% the next time a recession inevitably comes, being left with a gun with zero bullets. So even though economic indicators did not yet warrant a hike, they did anyways to reload the chamber so to speak. They took a gamble that current economic stability was strong enough to withstand very dovish and gradual normalization in interest rates. However, what the markets are telling you, and what some feared all along, is that asset markets were so much driven by QE and hot money that even a mere 0.25% increase in rates is causing financial cracks to unravel. The bull case was always that the economy would eventually become self reliant as the Fed exits QE. That is not happening right now.

 

[FredTMC]

I'm calling it now. $0.35 non-GAAP and Thursday's close is $118.

wow. 35 cents is far higher than analyst estimates. That would be v surprising to me

i was thinking 10 cents

- - - Updated - - -

- I think Tesla will definitely guide higher than 70K. I got the 70k number from TV today on CNBC; I'd assume the # to be accurate, considering recent analyst adjustments.

- Isn't it possible for Tesla to be FCF+ for Q1 and Q2 at least? Maybe Model 3 reservations and beginning Q2 with ~full production of 1,600-1,800 cars/week can get them there and then some? I'm not an expert on their financials and how they'll structure their Model 3 and Gf investments this year, but do any of you think it's possible Tesla can exit 2016 with a higher cash balance?

I feel FCF+ guidance for Q1 is 100% essential. Tesla knows the macro environment right now. Street wants to hear that they stopped burning cash.

 

[jedisurfer1]

Yellen and then TSLA earnings. It's going to be very interesting and/or painful tomorrow. Still long on them, somehow had a very old and low limit order from way back when they were 240ish that somehow got filled this week because I didn't check on it and now I've got some skin in the game. I'm in DIS and even with their quarter after hours seemed pretty sour. TSLA is going to need some strong guidance to prevent a landslide.

 

[chickensevil]

I'm calling it now. $0.35 non-GAAP and Thursday's close is $118.

wait... .35... that would be amazing!