Short-Term TSLA Price Movements - 2016

[geneclean55]

Anyone looking at a buy opportunity tomorrow morning? Nasdaq futures are not looking pretty, but TSLA seems generally resilient after early hour shocks.

 

[hoang51]

Anyone looking at a buy opportunity tomorrow morning? Nasdaq futures are not looking pretty, but TSLA seems generally resilient after early hour shocks.

I might, but don't know if it'll be for TSLA. Apple tanking is going to affect tomorrow's trade. Also, the Federal Reserve meeting might make traders cautious too. TSLA is holding up well with the sideways trading around $250.

 

[Xpert]

Anyone looking at a buy opportunity tomorrow morning? Nasdaq futures are not looking pretty, but TSLA seems generally resilient after early hour shocks.

I have turned short term bearish since they missed delivery numbers and slowly gone all cash since. The model X delay might have a large impact at earning, i am doubting the current ramp speed with delays reported in the X forum recently. if i remember correctly last huge painful drop was in part due to X delay. TE may save the day, or it may not. GF is making progress but not significant yet. Kinda along the line of DTU thinking so i am Waiting for entry point after ER unless there are other developments. I am Also watching out for sympathy move in case Linked In or Amazon crashes after ER.

 

[spacekadet]

Tomorrow could be a rocky day. AAPL is going to plummet after their earnings and may bring the market down with it. TWTR is going to sink as well.

 

[FredTMC]

I might, but don't know if it'll be for TSLA. Apple tanking is going to affect tomorrow's trade. Also, the Federal Reserve meeting might make traders cautious too. TSLA is holding up well with the sideways trading around $250.

Tesla (TSLA) is THEE growth stock for years to come.

It'll be similar to AMZN. Tesla will always plow their earnings back into the business to grow more and bring EVs to the mainstream

 

[Johan]

AAPL lost more than TSLA's entire market cap in after hours today. "Hello TSLA" is right.

Thanks Mike. A boy can dream. A boy is an optimist. The main thing with the stock market is everyone (at least smart people) always keep saying "cash is a position too" but in reality you're in the stock market in the first place because you love to be invested. And the thing the market loves most in this day and age are growth stocks. Especially the ones with a story and with visionary CEOs. That's why TSLA is so often brushed off by bears as a "fanboy" stock. But having fans is usually a good thing. So - a boy will keep dreaming.

 

[Fallenone]

Thanks Mike. A boy can dream. A boy is an optimist. The main thing with the stock market is everyone (at least smart people) always keep saying "cash is a position too" but in reality you're in the stock market in the first place because you love to be invested. And the thing the market loves most in this day and age are growth stocks. Especially the ones with a story and with visionary CEOs. That's why TSLA is so often brushed off by bears as a "fanboy" stock. But having fans is usually a good thing. So - a boy will keep dreaming.

There's one thing I think may prevent some of the smart money to invest in today's TSLA. Negative EPS and FCF. I don't know for sure but I imagine some funds may have rules about banning investment in negative eps/fcf companies. So even if some fund managers would like to, they might be bound by rules.

 

[Julian Cox]

To be clear, I did not specify that they were technical shorts either. Some surely were, but technical traders are the minority in the market, and they have long covered by now if they are good enough to be trading any size.

I merely said that as such a polarizing stock, there is a contingent of bears waiting on the sidelines to enter at any sign of weakness, and the Jan macro turmoil provided that entry.

It is unclear whether a break of 200 or 180 provided them with this go ahead signal, or if the perceived tightening of credit markets thus lack of funding sources was what caused the break in the first place. In truth it was a combination of both feeding into eachother.

What is very clear is that whether you shorted on a technical breakdown or on the fundamental basis of a credit freeze, neither of those thesis is still valid today. Technically we are in a heavy uptrend after that false breakdown. And the general capital environment has loosened back up, not to mention the 400k reservations providing a backdrop for any capital raise. Instead of distressed, it is the easiest environment in the world right now for Tesla to raise money.

There is no valid reason left to hang on to for a short who entered during the Jan crash. This is why they are vulnerable here. And would be let off easy on any decline from here as they surely would scramble to cover and cut their losses. A decline from here would decrease short interest, not increase.

Now, I agree that there is about a 20 million share core fundamental short contingent that have been around in one form or another for the past 4 years now, who aren't going anywhere unless there is a major fundamental catalyst. These are not who I was referring to.

Edit:



See above.

May I thank you for the opportunity to read something from you that is both valuable and insightful and that I cannot fault on any basis.

[insert handshake emoji]

 

[Julian Cox]

IMO this is very wrong. A cap raise which leads to a raise in production goals will be transformational for share price/valuation.

The undeniable fact is that current valuation in large part is due to Tesla's own projected 500k future target. Otherwise it would be valued by similar metrics to GM, F like the bears mistakenly already do. You are correct that the market only believes this to one degree or another. In fact the believability and perceived likelihood of achieving this goal is what contributes to the ebbs and flows to the stock price. Every analyst's DCF model is based on this projection. Some like MS and GS believe only a base case of 250k in 2020. Some like Andrea James are more optimistic.

No matter the case, future production level is a key variable that is factored in by the cumulative market participants. (In addition to profitability(margins), future earnings multiple(function of growth level) etc)

By raising capital for the express purpose of ramping up said future production level, every market participant will have to re-evaluate their own projections - and thus their price expectations. Even for those who do not believe, like MS and GS, they would still have to adjust their 250k 2020 number, unless they think Tesla is raising cash just to sit on it. So even if they do not believe a 1 million 2020 number, it would still have to be higher than their current model suggests. This means that overnight Tesla's valuation would need to be recalibrated(accounting for some dilution of course). In truth it probably will not be over night but over the course of a few weeks or however long rolling margin calls logistically take.

What happened? I absolutely agree! You just put it better that I have been saying it for half a year.

This 500K per year raised to some significantly higher number with credibility reflected in the capital structure - especially if the business turns more than a cent of operating profits in back to back quarters, GAAP so much the better - is the ultimate baseball bat to the heads of the shorts and Musk can swing it whenever he wants.

Jesse you shared some insights about the capital markets. Do you by chance have a view of how that looks as a function of election season or any other macro thing from here out to November or how the Apple thing might color the tech sector as a whole in coming months in terms of tightening or loosening in % terms.

Would be very helpful to have this a calibration factor for security of price targeting. This is an area where I assume a circa 30-40% overlay on Tesla specific price action and it would be great to get that down to 15-20% with a clearer view than I have in this regard.

Just a footnote to that - Tesla has a number of possible white swan options when it comes to M3 CapEx. IMO it is only 95% likely that they will look to the capital markets at all.

 

[Julian Cox]

I follow your logic 100% here. What if it's this simple then: Elon says on conference call "Oh, by the way, due to unexpectedly high interest in Model 3 we have adjusted our growth plans, we want to aim for 1 million cars built in 2020 so we will need to get started on Gigafactory 2, Vehicle plant 2 and in order to do this we will need to raise cash, approximately 2 billion dollars, and we plan to do this before the third quarter of 2016. We are working closely with our banking partners in GS and MS to make this an attractive deal to the credit markets". Boom - short squeeze, stock price goes up, the capital raise happens after the stock price has gone up.

The point is it's not that the actual capital raise takes place and then this causes the squeeze, but rather that it's the news that a capital raise is needed and is going to take place that can cause the squeeze.

Absolutely. What the shorts are hopeful of is not a capital rase to capture more opportunity.

Instead the shorts obsess about cash burn and profitability waiting patiently for Tesla to commit an act of desperation to raise capital as an alternative to either:

1: Going bust trying to keep the promises it has made to its shareholders without the capital to do it. or
2. Having to back down on those promises like 500K cars per year that sit at the bedrock of valuations.

They think that TSLA is caught in an inescapable pincer movement between those two imperatives.

Getting caught in that pincer (or more accurately when the Longs finally realize that they are caught in that pincer from a short seller's perspective) would definitely result in flip from Tesla owning the markets to the markets owning Tesla - and this is exactly what drives 30+ millions short interest - they see Tesla making lofty promises to shareholders that cannot be met without asking shareholders for the money to meet those promises and that it defies the fundamental tenants of Capitalism itself for Tesla and its current shareholders to have it both ways and therefore for TSLA's market valuation to hold up at the $30bn level is completely impossible, just a matter of time before reality sets in and it collapses.

Except that they are wrong. It is not just possible it's as good as guaranteed, actually Capitalism guarantees it, it's just that most people have forgotten what Capitalism is - having never witnessed the sheer power of it in action in the lifetime of anyone currently living. Capitalism isn't about protecting stagnat monopolies, it's about torrents of capital flooding in to meet the demands of consumers - and busting through any and all obstacles to do that.

This is the fundamental missing link that 40 years of automotive and manufacturing industry expertise in management and stock market sector analysis will blind an expert to utterly:

Tesla's reservation system is not an order book. Tesla has $0.00 liabilities, no contract to supply anything to the holders of 400,000 M3 reservations (or a million or whatever it becomes) except a $1000 refund if it doesn't work out. They are not customers that can sue for non delivery or will walk if the shipment is late and there is no competitor that can swoop in and supply that chunk of consumer demand.

This allows Tesla to tell the markets: If you want a bit of this action here's the price, take it while it's hot or someone else will because we know that you know that there is no stronger offer available to the capital markets anywhere that if we build it with your capital or anyone else's they will come. For our sake we can totally afford to walk away from any funding offer we don't particularly like. Ultimate negotiating position - an the Bears have mistaken it for a classic overtrading trap - the sort of thing that gets founders diluted out of existence and companies owned by their bond holders and senior lenders.

I promise that you will never again in a hundred years have such an iron-clad guarantee that so many incredibly wealthy and astute expert-driven investment professionals have gotten something as wrong as this short trade - and it goes down this year - and I think it goes down in Q3 after the Q2 ER and Q3 guidance and the entry point where it starts to unravel is the GF unveil which when it happens is a pre-announced event and not a curve ball out of left field that TMC investors can miss.

Why the GF unveil: Not the surprising existence of battery making machines. No, this unveil IMO will date stamp Tesla effectively having to start unveiling its business plan in a way that can no longer be confused with a business in trouble or in desperate need of anything it does not already have access to in spades (including capital for the asking) and it will dumbfound the auto sector and its experts progressively from there until Q2 ER and Q3 guidance stakes them to a tree.

 

[schonelucht]

I doubt any TSLA shareholder is complaining that the company found out that they can charge a lot more money for their products and make more margin.

For me, Tesla Energy is still in "show me the money" mode. The Model 3 did 10 times as much revenue as Tesla Energy in one day on reservation fees alone for a product that is not going to be available for another 2 years. Powerpacks/walls on the other hand, supposedly so popular that they can double the price before shipping, I want to see a quarterly report first where they actually move, let's say, a 100 million in product before I am jumping on the hype train.

 

[AlMc]

Jesse and Julian: THANK YOU!

 

[Julian Cox]

Jesse and Julian: THANK YOU!

Meh. Take a hike you flipping whiner! Boys are up for some banditry $$$ The etiquette club for the Alternates is down the hallway

And BTW you're welcome

 

[lango]

For me, Tesla Energy is still in "show me the money" mode. The Model 3 did 10 times as much revenue as Tesla Energy in one day on reservation fees alone for a product that is not going to be available for another 2 years. Powerpacks/walls on the other hand, supposedly so popular that they can double the price before shipping, I want to see a quarterly report first where they actually move, let's say, a 100 million in product before I am jumping on the hype train.

Keep in mind that TE is JB Straubel's main focus and he is the second guy and likely future CEO. This alone I think is a strong indication of it being a parallel business to cars and not a way to use up left over batteries. So I think it should be valued as such and the market doesn't. It is a bit frustrating though that things are not flowing yet, same with Model X actually. I think 2017 will see significant revenue from TE.

 

[Julian Cox]

For me, Tesla Energy is still in "show me the money" mode. The Model 3 did 10 times as much revenue as Tesla Energy in one day on reservation fees alone for a product that is not going to be available for another 2 years. Powerpacks/walls on the other hand, supposedly so popular that they can double the price before shipping, I want to see a quarterly report first where they actually move, let's say, a 100 million in product before I am jumping on the hype train.

Tesla Energy is in hide the money mode.

 

[vgrinshpun]

What happened? I absolutely agree! You just put it better that I have been saying it for half a year.

This 500K per year raised to some significantly higher number with credibility reflected in the capital structure - especially if the business turns more than a cent of operating profits in back to back quarters, GAAP so much the better - is the ultimate baseball bat to the heads of the shorts and Musk can swing it whenever he wants.

Jesse you shared some insights about the capital markets. Do you by chance have a view of how that looks as a function of election season or any other macro thing from here out to November or how the Apple thing might color the tech sector as a whole in coming months in terms of tightening or loosening in % terms.

Would be very helpful to have this a calibration factor for security of price targeting. This is an area where I assume a circa 30-40% overlay on Tesla specific price action and it would be great to get that down to 15-20% with a clearer view than I have in this regard.

Just a footnote to that - Tesla has a number of possible white swan options when it comes to M3 CapEx. IMO it is only 95% likely that they will look to the capital markets at all.

One of the very strong candidates for the white swan event is TE financing the Model 3 ramp. The $250/kWh --> $470/kWh move along with the reveal of cost being below $190/kWh for automotive applications (whatever it translates to for the cost for stationary applications) were the hints.

About 1/7th of the GF is built in Phase I, with the cell production slated for the end of this year. The MS/MX battery needs will be satisfied using cells from Japan. So the question is, where is the 2017 production of the GF Phase I cells (whatever it is - up to 5GWh) will go to? That would be BES, with up to $470/kWh - $133/kWh = $327/kWh available as a gross margin (depending on final negotiated price).

One of the negotiating points could be reduction from the list price of $470 if a taker is willing to pay up front (using their financing!) for the supply of TE products throughout 2017. For example, at the negotiated price of $350/kWh, to pick a number from the Oncore study, that payment would be $1.75B on 5GWh worth of PowerPacks/PowerWalls, with as much as $1B of it being net profit.

Then build Phase II of GF so another 5GWh or so worth of cells are available for the initial production ramp of Model 3, while GF Phase I continues to pump TE products, supplying up to $1B of net profits per year.

-----------------EDIT-----------------
Looks like Julian clarified his own hint, beat me to it.

Hide the money mode it is.

 

[Fast Laner]

Incentives on EV's in germany
As this is not even mentioned in the EU outlook thread i try to give the main figures the german government and the CEO's of the main german car manufactorers agreed to in yesterday evenings meeting:

Maximum base price for an unloaded car eligible to get incentives is 60.000 Euros.
Incentive per car is 4.000 Euros, 2.000 from the government and 2.000 from the car manufactorer.
In total 600.000.000 Euros from the government, 600.000.000 Euros from the car manufactorers.
The start of this programm is may 2016 and it will end roughly in 2020.
400.000 cars max can get the incentive.

Neue Subvention: Im Mai kommt die 4000-Euro-Kaufprämie für Elektroautos

 

[PaulusdB]

Three things to bear in mind:

1. For a car to be eligible, the manufacturer of that car has to take part in supplying half of the incentives
2. There are no Tesla cars available in Europe under € 60K before 2019, when M3 will start to be delivered
3. The EV incentive includes plug-in hybrids

 

[Fast Laner]

The rules set up in this programm are obvious reasons that the german car manufactorers and the german government
want the incentives to stay in germany and not to get a single euro to buyers of TESLA products.

 

[PaulusdB]

Yes, in fact it is the German taxpayers helping their car manufacturers to get competitive.