Short-Term TSLA Price Movements - 2016

[RationalOptimist]

One explanation for slight delay (other than the fact that it's not really a full week yet, at least in US) is that they're waiting for a few more to creep over a big milestone. So I'm going with 350,100 as the announced number.

 

[jhm]

Shorting Oil, Hedging Tesla

Here's my conversation with Tony Seba's theory on how EVs will reach 100% penetration of the new auto market by 2025. And it's conveniently located on the Shorting Oil thread.

 

[AudubonB]

...While I was making adjustments... I said "if only I could sell as many bikes this weekend as the orders Tesla just took for the Model 3."...which resulted in her...depositing $1,000 with Tesla in the middle of her fitting.

Very nice! Do you mind if I use that line? Again and again?

No, I didn't think so. Thanks!

 

[sunhelm]

View attachment 171073

Tomorrow's added fuel will help boost SpaceX launch the day after!

I'm sure we all know this but the guy's just amazing leading two very high profile, high impact organizations.

 

[jhm]

"The automaker said it is making the changes to its strategic plan because of several new trends in the U.S. automotive industry. Fiat Chrysler said it believes that industry sales either hit their historic peak in 2015 or will hit a peak in 2016. After that, total industry sales are expected to either remain flat or fall."

Damn, just a few days ago I was trying to estimate the ICE peak and figured that it was about mid 2018. At least, that is when EV growth would soak up all the growth in the industry, leaving ICE to decline structurally.

So imagine my surprise to learn the peak may have already happened in 2015.

How anticlimactic.

 

[SBenson]

Interestingly broad market too is set up like Tesla at the moment

The $1 Trillion Short Underlying Stocks' Spring Awakening

 

[Julian Cox]

Respectfully I think you are thinking from a purely financial perspective like a guy with only a hammer thinks of all problems as nails that need pounding.

There is a critical path to rolling out Model 3 (not the way Elon uses the expression) just the ordinary way.

In the most simplistic terms omitting iterations and mutual dependencies but without conceding accuracy:

Establish the product and the process to build it then scale the process.

Reverting to the way Elon uses the expression: Serious money is on the critical path at the scale the process step - but it is not on the critical path before then no matter how big the scale.

Also. Raising money generally comes with an implied obligation to deploy it efficiently. If they had a spare $10 billion raised right now that would de-risk any concern of raising it later but they couldn't spend it until they were done getting clear on exactly what they were spending it on. There is also an opportunity cost to rush into it. Funding a proven and costed out process that will definitely deliver a product that consumers will love at good retained margins is a total no brainier. Seeking funding at any stage prior to that being established attracts a discount for execution risk. Also given the situation Tesla is actually in - with more time and more complete execution towards readiness to deploy capital comes more competing offers of funding to choose between. This is especially true when the execution reference data of MS, MX and Tesla Energy is building strength in the background following more than two years of spending to bring those projects to simultaneous fruition. We are just entering the first ever quarter (Q2) with all three pulling in proper cash simultaneously. The before and after photos will be jaw droppingly different in terms of fundamentals - and you think they should tee off a Q1 miss for a raise on hype alone when they don't need the money yet? No! That would be mindblowingly dumb!

I say that the optimum situation for Tesla is to have a cash flow positive and profitable business with a million M3 reservations, an astonishing lead in Autopilot technology and autonomous charging and a production-ready Model 3, Gigafactory Module 1, And beta-scale production line all up and running.

Then hit it with all the cash in the world to duplicate these items on silly favourable terms because the world will quite naturally and quite literally throw cash at them under such circumstances. That's 6 months away.

By the way the above is exactly why I keep saying that Q3 following Q2 ER promises a perfect storm on a biblical scale for this stock and I think we will have the remainder of a hype cycle followed by a pull back in the summer to find an entry to ejoy massive SP gains with the kind of certainty that never happens on the stock market but once a century - thanks entirely to a bunch of shorts that are ill-equipped to believe it even if it were spelled out exactly as I have done.

 

[Todd Burch]

Although we saw reservation rate slow down by Sunday, it was Sunday after all--a day in which I think there is in general less overall interaction with others. I think viral stuff tends to slow down on Sundays (just a hunch). It's possible that the start of the work week increased the rate some as new reservation holders (or just excited people) started talking at work at the water cooler, convincing those around them to reserve. I'm estimating about 350K orders. I think the large order numbers are already baked into the price though, so I wouldn't expect the order numbers to significantly impact the trajectory of the stock short-term.

Would be happy to be wrong though.

 

[austinEV]

By the way the above is exactly why I keep saying that Q3 following Q2 ER promises a perfect storm on a biblical scale for this stock and I think we will have the remainder of a hype cycle followed by a pull back in the summer to find an entry to ejoy massive SP gains with the kind of certainty that never happens on the stock market but once a century - thanks entirely to a bunch of shorts that are ill-equipped to believe it even if it were spelled out exactly as I have done.

So if I read you correctly, you imagine this bullish cycle topping out somewhere (ATH-ish?) resting back to some support level then hitting ATH's post Q2 ER?

I honestly didn't expect this little rally without a good Q1, and Q1 looks poor. If Q1 had been a blowout then Q2 wouldn't have been necessary IMO. But this run to near ATH on the back of just the M3, with a delivery *headwind* I would never have predicted.

We have known the 3 was going to be announced, look awesome, and be reserved in large numbers for *MONTHS*. Crazy how dumb the market is.

 

[lango]

So if I read you correctly, you imagine this bullish cycle topping out somewhere (ATH-ish?) resting back to some support level then hitting ATH's post Q2 ER?

I honestly didn't expect this little rally without a good Q1, and Q1 looks poor. If Q1 had been a blowout then Q2 wouldn't have been necessary IMO. But this run to near ATH on the back of just the M3, with a delivery *headwind* I would never have predicted.

We have known the 3 was going to be announced, look awesome, and be reserved in large numbers for *MONTHS*. Crazy how dumb the market is.

Is this not partly explained by TSLA after Model 3 reveal breaking from indices like auto, energy, oil and solar?

I think it can go to ATH soon. All we need is some more positive reservation updates.

 

[jhm]

Interestingly broad market too is set up like Tesla at the moment

The $1 Trillion Short Underlying Stocks' Spring Awakening

That's messed up. I get retreating into cash, treasuries or gold, but is shorting the market even an asset class?

 

[austinEV]

Is this not partly explained by TSLA after Model 3 reveal breaking from indices like auto, energy, oil and solar?

I think it can go to ATH soon. All we need is some more positive reservation updates.

I agree, and we are so close it cannot be called wishful thinking. I pin this on old fashioned enthusiasm in the company combined with some shorts unwinding.

I wrote earlier that one force pushing us up is new investors who got involved due to their reservation. Think of this rally from their point of view: They bought in and have had *literally* no down day. Why not put in some more? Why not tell your friends?

 

[stevej119]

We have known the 3 was going to be announced, look awesome, and be reserved in large numbers for *MONTHS*. Crazy how dumb the market is.

We have known it was going to:

Be announced - Yes
Look awesome - Yes
Be reserved in large numbers - Yes
Have over 100,000 deposits placed in the hours before the reveal and then another 150,000 over the next two days? If someone predicted that, I missed it.

 

[jhm]

I am not a short term trader so not sure if this is correct but is this not partly explained by TSLA after Model 3 reveal breaking from indices like auto, energy, oil and solar? I think it can go to ath soon. All we need is some more positive reservation updates.

Hmm, this gives me an idea. Suppose that the Model 3 reservations are a big enough event that the market comes to view Tesla as inversely correlated with the rest of the auto industry. Where does that put oil? If oil is correlated with the auto industry, then it is hard to see how it could also be correlated to Tesla. So separating Tesla from autos could be a prelude to decoupling Tesla and oil.

Fiat Chrysler is suggesting that the auto industry is presently at its peak. As the market comes to see the ICE auto industry in decline, the next logical step is that oil will soon fall into decline as well.

Oh, yeah, SolarCity has been doing quite well. Tesla and SolarCity have compatible visions for the future.

 

[lango]

Hmm, this gives me an idea. Suppose that the Model 3 reservations are a big enough event that the market comes to view Tesla as inversely correlated with the rest of the auto industry. Where does that put oil? If oil is correlated with the auto industry, then it is hard to see how it could also be correlated to Tesla. So separating Tesla from autos could be a prelude to decoupling Tesla and oil.

Fiat Chrysler is suggesting that the auto industry is presently at its peak. As the market comes to see the ICE auto industry in decline, the next logical step is that oil will soon fall into decline as well.

Oh, yeah, SolarCity has been doing quite well. Tesla and SolarCity have compatible visions for the future.

Heh, yeah although we might have already seen the Tesla and oil decouple. I certainly hope that's the case.

 

[neroden]

Yep. And Original plan was initial production by end of 2017. I'm fairly certain the old constraint was the need to control CapEx burn rate. That's no longer the constraint.

What's the new critical path item(s) for a quicker launch?

This is getting into long-term rather than short-term again (sorry).

I believe that the launch *cannot* be made quicker -- it's the sort of problem discussed in The Mythical Man Month -- the critical path for the launch is design of the car and design of the assembly line, and they can't be sped up. As Elon tweeted, they are going to try to make the *ramp-up* quicker. Which is not the same thing.

I believe the critical path for making the ramp-up quicker is land purchase and governmental permitting for construction of additional factories.

Tesla can solve the problem of ramping up to 500K per year in 2019 rather straightforwardly.

But in order to ramp up to more than that in 2019 or 2020, they need *new locations*. Land negotiation and permitting has proven to be a really slow process *every time*, for every Supercharger site, for every service center, for the Gigafactory, and even for the Tesla Factory -- remember model S was basically delayed a year while Tesla tried to get a good deal on the factory.

Tesla needs to start lining up the sites for the additional factories (both assembly plants and Gigafactories) now even if they don't intend to start construction for 2 years. Because it's likely to take that long to get the deals done.

 

[theschnell]

Hmm, this gives me an idea. Suppose that the Model 3 reservations are a big enough event that the market comes to view Tesla as inversely correlated with the rest of the auto industry. Where does that put oil? If oil is correlated with the auto industry, then it is hard to see how it could also be correlated to Tesla. So separating Tesla from autos could be a prelude to decoupling Tesla and oil.

Fiat Chrysler is suggesting that the auto industry is presently at its peak. As the market comes to see the ICE auto industry in decline, the next logical step is that oil will soon fall into decline as well.

Oh, yeah, SolarCity has been doing quite well. Tesla and SolarCity have compatible visions for the future.

The other thing that decouples Tesla from oil is the reservations were through the roof in the midst of the cheapest oil in nearly a decade. In other words, people were lining up because they like the car rather than primarily to save fuel. Obviously we've known this on TMC, but now we know at least 300k other folks know this as well, and that number is only going to grow.

Now if I had only realized the market would start pricing this in this week, I would have done very well with those 10 call options. Unfortunately I only have 2 left from an earlier purchase.

 

[austinEV]

Hmm, this gives me an idea. Suppose that the Model 3 reservations are a big enough event that the market comes to view Tesla as inversely correlated with the rest of the auto industry. Where does that put oil? If oil is correlated with the auto industry, then it is hard to see how it could also be correlated to Tesla. So separating Tesla from autos could be a prelude to decoupling Tesla and oil.

Fiat Chrysler is suggesting that the auto industry is presently at its peak. As the market comes to see the ICE auto industry in decline, the next logical step is that oil will soon fall into decline as well.

Oh, yeah, SolarCity has been doing quite well. Tesla and SolarCity have compatible visions for the future.

And that money has to go somewhere.

 

[lango]

2-3 years and 1$B cost for Kia in Mexico. 300k cars annually. Tesla would need three of these, the chinese one with a partner.

Old news but lead times and cost would be the same now:
Kia to build $1 billion Mexico small-car plant

 

[austinEV]

2-3 years and 1$B cost for Kia in Mexico. 300k cars annually. Tesla would need three of these, the chinese one with a partner..

Old news but lead times and cost would be the same now:
Kia to build $1 billion Mexico small-car plant

I wonder if they are leaning towards a greenfield auto factory or buying an existing one? They did pretty well with NUMMI.