Short-Term TSLA Price Movements - 2016

[Gerardf]

Oil is affecting TSLA's share price not because it affects Tesla's business, but because oil is impacting the stock market as a whole. With oil at these levels or lower, there will be bankruptcies and layoffs worldwide in the oil and gas industry. Not to mention mining which is also collapsing. This directly and indirectly affects millions of people.
Now even in the worst case scenarios I do not see this turning into a 2008 type situation. There is no financial crisis. However, is it enough to tip an already shaky economy into recession? The markets are certainly starting to price in that risk.

Also note that in Europe the low energy price are a big stimulus to the economy. As most energy has to be imported, Europe can spend that money on other things and lower production costs. (Norway as oil exporter being the exception of course).

News was already out that German economy did well, a surplus 2x higher than expected.

 

[dreamingof3]

Anyone care to compare what is happening with TSLA stock to SCTY?

SCTY tanked from 50 to 25. Panic was in the streets-then what happened? Huge rally from 25 to 57

I see this happening with TSLA soon. Some major news catalysts combined with new buying, a lack of selling, and short covering will generate a huge price spike.

 

[Drax7]

So movement in oil primarily impacts stock sentiment with very limited impact on the business itself. So this can be seen as a frustration or opportunity for investors. The opportunity is to buy the stock when sentiment is low.

An average ICE vehicle gets about 1000 miles per barrel and will be driven about 150,000 miles within its first 10 years. Thus the value of an ICE vehicle is short about 150 barrels. This gives us a handy way to track cages in the value of these vehicle relative to changes in oil. If the price of oil goes up $1 per barrel, then ICE vehicles lose about $150 in value. So the decline of oil from about $80/b to $30/b increases the value of ICE vehicles by $7500. Note that this is the size of the federal tax incentive for EVs. Thus, the decline in oil has merely nutralized the tax advantage that EVs enjoy in the US. Moreover if oil fell further to $20/b, this would only add a $1500 advantage to conventional vehicles. These impacts are huge if you are selling something as non-compelling as the Leaf, but I believe Tesla is offering products that are sufficiently compelling that a comparitive value shift of $7500 does not create a material demand shift. This is especially true for Models S and X, where $7500 is just 7.5% of the price of the car. The sensitivity for Model 3 will be higher as these are lower priced cars where $7500 is 15% of the price of the car. But here is where we have a huge timing advantage. Oil is presently low. Suppose it stays low through the first year of Model 3 deliveries. This satisfies the demand of early adopters so no problem. Then suppose that in 2019 oil climbs back up to $60 or $80 per barrel up from $30 at launch. This definitely fuels demand globally for the Model 3. Even without this boost I think demand scales nicely through 2020, but with this oil tailwind stock sentiment should get a huge boost as well. In any case, it is beneficial that the price of oil is low heading into the Model 3 launch.

So while I cannot predict how low oil will go, the incremental impact on demand is pretty minimal. If oil were to fall below $20/b, that could be a wonderful set up for the Model 3. In a few years, oil should be a huge tailwind for the stock.

Generally about 20 gallons of gasoline refined per barrel of crude oil.
1000 miles seems excessive .

 

[Julian Cox]

jesselivenomore

Oil is a cost item to every other business (and nation) except net oil producers.

I don't think TSLA will move on story, I think it will move on a turnaround in its fundamentals as a result of coming out of a net development spending phase and into a net selling phase.

We know that low oil price has no meaningful negative effect Tesla demand. It is very hard to trouble Tesla on this score when it has tens of thousands of vehicles and $billions in outstanding sales orders.

The only material effect of low oil prices on Tesla is lowered cost of shipping in battery cells and other components from overseas and lowered costs of shipping finished goods to both domestic and export markets.

 

[AlMc]

For those who like to speculate on Apple-Tesla: http://finance.yahoo.com/video/apple-convince-musk-sell-tesla-150400032.html

 

[Chickenlittle]

2016 for TSLA seems to have been all about macros. I had hopes for model X ramp up to excite investors but it wasn't meant to be. Can't blame them, the ramp up seems to have fizzled out after new year : most excitement these days comes from another few 1000 customers invited to configure instead of from reports that another few 100 customers got their car. I fear we won't see short term drivers pushing against macros until at least the next guidance report.

Can you clarify for me how you know X ramp has fizzled? We saw reports of 2 or 3 sigs delivered while ove 200 actually delivered in 2015. So you expect to reports of 100 delivered in two week of 2016 which would equate to 10,000 delivered? What about the 300 produced but in transit at the end of the qtr. Why don't we see those reports? Because only the fringe lunatic portion post here

 

[jesselivenomore]

The economy is either headed for a recession or it isn't. This is a pretty binary event. If it is not, then buying TSLA here and averaging down is the right thing to do. But if it is, then buying here is a risky proposition, moreso than people think. Buying based on TSLA's fundamentals in the face of macro markets going the other way is a particularly dangerous proposition. Because even as TSLA's fundamentals continue to improve, the equity markets can price assets completely differently in a bull market environment compared to a bear market.

From 2007 to 2008 AAPL's revenues increased by 50%, while its stock price declined by 60%.
From 1999 to 2001 AMZN's revenues increased by almost double, while its stock price declined by 95%.

Now, that was in the midst of an internet bubble and a financial crisis, neither of which I believe to be the case today. So do not take this as alarmist, because I DO NOT think TSLA will be hit that hard. However, the point is, improving fundamentals is no guarantee of an appreciating stock price when there are macro headwinds. Even if we only get a run of the mill recession here, which to me is the most likely bear scenario(not 2000 or 2008), TSLA can still be impacted quite a bit. Again, in a bull scenario where we avoid a recession, now(200) is the time to buy.

Now does that change the long term story in the event of a recession? No. Indeed, AMZN and AAPL are both up tremendously even from their 1999/2007 highs. But, the point is this, had you started buying too early, you would have run out of powder when the real buying opportunity came. Or worse, lost everything before the eventual rise.

With that in mind, where are we now? At the end of a bull market correction? Then buy. Or at the beginning or a bear market(even if it is a mild one)? Then sit tight, or even hedge.

I cannot answer that question for you guys. But just know that it IS a question. Not a certainty. Something I do not see enough people asking themselves.

 

[dc_h]

Thanks jhm. Agree the math would need more detail for a econ paper, but I think the idea is relevant. It highlights the need for EV cars to be better, not just environmental. If EV's succeed, the long term price of oil will stay low. Future peaks will be lower and lows will be lower, slowly forcing capital out of the industry. There is a disinvestment cycle by the oil majors now, but Russia and OPEC have not yet pulled back as well.
Short term, oil prices and currency values matter. Longer term EV needs to prove itself to consumers, not investors or fans. Maybe we'll start to get a better picture in March after the reveal, if Tesla starts taking orders.

Generally about 20 gallons of gasoline refined per barrel of crude oil.
1000 miles seems excessive .

 

[esk8mw]

Got more at $197. What a gift. I'm ready for more if they want it to go lower, though.

 

[Chickenlittle]

Are you looking at global sales or making the common mistake to look at US/NA sales only to value a company doing business globally?

Renault obviously (almost) sells zero cars in the US and the Leaf had an important product transition in 2015 (which greatly impacted LEAF sales, some dealers still don't have the 30kWh version on the lots).

I wouldn't count out Nissan-Renault as the global EV sales leader over the coming years, especially once the Leaf2 and Zoe2 are launched ca. 2018.

PS: That stat prediction is ex-China and ex-PHEVs, BYD could outsell everyone if we include PHEVs in the sales stats.

USA sales. Was shopping for volt versus leaf in northern Virginia market which is very favorable foe ev sales. Volts had no volume without any room for negotiation. Sold all stock with only in transit cars available that were taken off sites because they were sold before delivery to dealorships. Nissan leafs (with the improved range) were available with 5 or 6 on lots with advertised 5 to 6 thousand dollar discounts. Anecdotal but I believe true. You believe in gen2 Nissan earliest available 2018 but totally discount model3 2017. Difference between these two is that people will hold off on leaf to get same car with larger range so sales to drop further. Model 3 a whole new car will not hurt sales in tesla awaiting it

 

[dreamingof3]

Got more at $197. What a gift. I'm ready for more if they want it to go lower, though.

My wife won't let me buy more :scared:

 

[colettimj]

So while I cannot predict how low oil will go, the incremental impact on demand is pretty minimal. If oil were to fall below $20/b, that could be a wonderful set up for the Model 3. In a few years, oil should be a huge tailwind for the stock.

I firmly believe that cheap oil is detrimental to legacy ICE manufacturers. How do you argue investment in BEV in the boardroom when consumers (for the most part) flock to the larger, less efficient, and more profitable ICEs? Short-term gains vs. long-term investment in a technology that they may not yet see as the future.

 

[jesselivenomore]

Yes, lower oil lowers cost for consumers and businesses. That is the positive. Can the positive outweigh the negatives? In the long run of course it will, indeed we will completely transition away from oil rendering it worthless. But in the short run it can still be painful for the economy. Again, to me it is still all a question mark how things play out. If there were no positives or only positives to low oil prices then the future would be certain. It is not.

 

[dalalsid]

Got some at 195. More at 190 if it gets there.

 

[dreamingof3]

The people selling here are shorts and panic sellers. 193 I must be seeing things

 

[dalalsid]

Geez! I told everybody who likes this stock and future prospects to nibble at 200.00. Which just happened to be the low of the day. If anybody is not long term, please sell any rally tomorrow am. It would be typical to rally after such a move, but I think it will be 195 at open.

So now that you seem to have a working crystal ball for the time being, how about adding some analysis to that statement.

 

[esk8mw]

OK, overall market are nearing/at flash crash August lows. I think we bounce from here. If I'm wrong, then I think we have to wait until earnings season to boost the market back up.

 

[Papafox]

Back in the 1970s, soaring oil prices caused "stagflation" in the U.S., a situation that stagnated the economy while inflation took off. It was the worst of both worlds. Conversely, plummeting oil prices take away inflationary tendencies and not only cut the cost of producing but also put more money in the pockets of consumers (they're not spending so much at the gas station). While Wall Street initially reacts negatively to falling oil prices, it doesn't take long for falling oil prices to be a big positive for the U.S. economy.

 

[aznt1217]

Not sure how many historians are out there, but TSLA is sitting at the same exact price range as Jan 2015-- it's kind of scary, we fluctuated at the same price level till about earnings. Then we hit lows in March, but then TSLA started letting it rip upwards all the way to our ATH in Mid July.

Right now every single technical indicator says we are oversold. The market is broken and fear is taking hold for some apparent reason. It's unfortunate that some couldn't hold out much longer and let emotions get the best of them.

 

[AlMc]

@Johan; you were correct about a 20% correction but for the wrong reason.
All in if we hit my target at last ER of $180.....It did not happen then. Hope/doubt it happens now.