Short-Term TSLA Price Movements - 2016

[tinm]

They'll do it near the end of the quarter to minimize impacts to S and X orders ... people deciding not to buy S or X and wait for 3 instead.

 

[Julian Cox]

I went crazy in at these share prices in hopes of not $300 in 6-8 months but rather believe it can be there in 4 months. Think about it.... Model 3 reveal in 2.5 months
as well as a potentially swing to profit in Q1 2016.

Maybe. The most likely outcome in my opinion is that Tesla would want to raise money at the top of a short squeeze in Q3 2016.

Why Q3. They will start collecting Model 3 reservations at the end of Q1 2016 and throughout April, May, June and July. An August or September 2016 time frame would give them a firm handle on the kind of demand they need to build capacity for. It also allows them to get into a flow-state with Model S, Model X and Tesla Energy combined, pumping out at least two quarters of impressive numbers and a total of four quarters of impressive guidance including the Q1 guidance delivered in a few weeks time (a nice chance for the new CFO to state something definitive about Q1 financials) and Q4 guidance deliverable in early August and of course the Annual Shareholders meeting in-between. it would make less sense I think to expect either Tesla's news-flow or the cooperation of Wall Street to create conditions for a SP boom around the M3 unveil and a world of sense to treat the whole year as a stock promotion roadshow focused on Q3 to pull the trigger on the back of what will probably be silly quantities of Model 3 reservations. On a side note, I do not think the 500,000 car per year in 2020 target will last the year. That was just the limit of credulity back in 2014 based on the nominal capacity of the Fremont plant. This year we will hear something based on auditable Model 3 demand and I think the base-assumption of the rational long thesis will be raised this year as a result. For example "scrub 500,000 in 2020, it is obvious that we will need to prepare capacity for 2.5 million units in 2020 to cope with the rate of registered and deposited demand". That message is on the cards and I think will change things somewhat radically, but not in the space of four months. More like 6-8.

Just my opinion and outlook for the year. Don't get me wrong, TSLA I think will be a pleasure to own between now and April too.

 

[everman]

I would like to echo many others thanks to everyone on the forum, but especially Julian Cox. Your inputs in this thread since mid December have been invaluable, and frames the thinking around TSLA during times of intense short term activity. I'd also like to thank JHM for his brilliant statistical and mathematical contributions.

As far as Model 3 unveiling, I anticipate either mid or VERY late March, as Elon as an ISS resupply mission to fly on March 21st. I'm sure he'll be wrapped up with SpaceX around that time.

 

[Papafox]

And the score at closing is:
DOW: Up 1.40%
NASDAQ: Up 1.97%
TSLA Up 2.93%

 

[mmd]

I would like to echo many others thanks to everyone on the forum, but especially Julian Cox. Your inputs in this thread since mid December have been invaluable, and frames the thinking around TSLA during times of intense short term activity. I'd also like to thank JHM for his brilliant statistical and mathematical contributions.

As far as Model 3 unveiling, I anticipate either mid or VERY late March, as Elon as an ISS resupply mission to fly on March 21st. I'm sure he'll be wrapped up with SpaceX around that time.

Very true. How about those who lost big money in the recent slide from 240, to 230, to 220 and now to 205? Should they also thank for their big (realized or unrealized) losses to the pep talks from the dreamers ?

 

[Julian Cox]

I would like to echo many others thanks to everyone on the forum, but especially Julian Cox. Your inputs in this thread since mid December have been invaluable, and frames the thinking around TSLA during times of intense short term activity. I'd also like to thank JHM for his brilliant statistical and mathematical contributions.

Thank you too - and to jhm and others.

There are few more effective ways in this world to do well by doing good and to directly defund terrible people that would sell the next generation down river than by backing this stock with courage on days like today.

Sick of caring about this thing from the bench. Elon if you're watching this, gis a job.

 

[McMuggets]

Very true. How about those who lost big money in the recent slide from 240, to 230, to 220 and now to 205? Should they also thank for their big (realized or unrealized) losses to the pep talks from the dreamers ?

It's only a loss if you realize it by selling. Worse mistakes by retail investors is that there is a tendency to panic sell instead of seeing the stock they were already believing in as being given away for discount prices. Has Tesla, the company, gotten worse or better from 2013 to 2016? Fundamentally better. Yet the price is the same. It's quite obvious that selling now isn't prudent, unless one is cash poor and needs money to pay their mortgage or something, or the intention is to get back into TSLA at even lower prices. Given time, $240 a share will seem like a great deal and $200 a complete steal. Averaging down, IMHO, is the best thing to do if you are a long-TSLA investor.

 

[ggr]

Satellites for broadband are notoriously slow. Latency is a serious issue. I wouldn't expect much from this.

This is a misunderstanding on your part, of what SpaceX's satellite constellation will do. The only current satellite offerings are in very high, or Clarke (geosynchronous) orbits, so they are about 40,000km above the surface of the earth. The SpaceX plan is to have about 4000 satellites in Low Earth Orbit (LEO, a few hundred km). So the latency to/from the satellite is 1/100th of what you are currently thinking. And the bandwidth will also be much higher because the received signal power will be better.

But then it gets really good. Because the horizon is so far away when you're a few hundred km up, you can route satellite-to-satellite and get to the opposite side of the world in only three hops. The actual distance the signal travels is only (again) a few hundred km longer than if you had a fiber on the great circle route directly between the end points (which, of course, you don't!). And those signals travel at the speed of light in a vacuum, which is about two-three times faster than fiber and wire. So for any kind of long distance connection, latency will actually be much lower than it is currently. This is why, if it works, it would revolutionize the Interwebs.

 

[Papafox]

Very true. How about those who lost big money in the recent slide from 240, to 230, to 220 and now to 205? Should they also thank for their big (realized or unrealized) losses to the pep talks from the dreamers ?

This forum has been very vocal about the pitfalls of short-term trading with TSLA since the stock is so vulnerable to macro events and FUD. I have ridden TSLA down from 240 and lower amounts as well, but my losses are paper losses and will turn to paper gains as TSLA exceeds 240, as it surely will later this spring. The paper losses on long-term calls and shares only become real losses when a sale takes place, and the TSLA advocates speaking recently helped forum members from realizing real losses. It's likely a good thing, not a bad thing.

 

[Fallenone]

Makes no sense to say 2.5m a year. That would need at least three more fully built and running at maximum GF. As of now the 1st phase of GF1 is still not completed.

On a side note, I do not think the 500,000 car per year in 2020 target will last the year. That was just the limit of credulity back in 2014 based on the nominal capacity of the Fremont plant. This year we will hear something based on auditable Model 3 demand and I think the base-assumption of the rational long thesis will be raised this year as a result. For example "scrub 500,000 in 2020, it is obvious that we will need to prepare capacity for 2.5 million units in 2020 to cope with the rate of registered and deposited demand". That message is on the cards and I think will change things somewhat radically, but not in the space of four months. More like 6-8.

Just my opinion and outlook for the year. Don't get me wrong, TSLA I think will be a pleasure to own between now and April too.

 

[TSLAROX]

Excellent news for autonomous vehicles: Remarks on Automated Vehicles: Detroit Auto Show (NAIAS) (1/14/2016) | Department of Transportation

 

[dalalsid]

Makes no sense to say 2.5m a year. That would need at least three more fully built and running at maximum GF. As of now the 1st phase of GF1 is still not completed.

Let's say they get 5X Model X reservations for the Model 3 in 6 months - thats 100,000. At 1000, that's 100 million. At 2000 thats 200 million. If 5000 of those are sigs at 15000 then we have 75M + 195M = 265M. But what if we have a +ve surprise and get 200,000 reservations? What will Tesla need to do? Now they have 450 million in deposits. Can they accelerate the Gigafactory to get to 500k by 2019 if they are infused with a boatload of free money? Can they increase their growth rate from 50-60% to 100% for a short while? Can they replicate the first phase on another continent? With the way things are going I think those are the questions Tesla will need to answer.

 

[CyberDutchie]

Excellent news for autonomous vehicles: Remarks on Automated Vehicles: Detroit Auto Show (NAIAS) (1/14/2016) | Department of Transportation

Maybe the reason for the after hours spike of 200K shares?

Good news indeed!

Now please allow me to put this into plain English:

In 2016, we are going to do everything we can to advance safe, smart and sustainable transportation innovations. We are bullish on automated vehicles.

We are committing to a six-month timeline to offer best practice guidance and propose model state legislation.

We are taking a fresh look at current regulations to see where new interpretations can be made, and we are asking manufacturers to continue to ask us to examine our regulations. And, finally, we are asking manufacturers to request exemptions where they believe automation advances can be deployed safely.

The actions we are taking today are bringing us up to speed: The bold investment proposal outlined by the President offers us a path toward a future transportation system that reduces Greenhouse Gases, advances safety, and moves our country Beyond Traffic.

 

[Curt Renz]

Schaeffer's Investment Research published an interesting article this afternoon about the huge number of put options that have been bought in hopes of the TSLA price closing under $200 when January options expire tomorrow. Those who wrote (sold) the puts are usually far stronger financially, and are often good at forcing options to expire worthless.

Link to Article: Tesla Motors Wild Ride Has Option Bears On Edge

 

[MikeC]

Cross-posting this confirmation that PowerWalls are shipping. Might help free cash flow this quarter.

electrek.co/2016/01/14/tesla-shipping-powerwall-crate-spotted/

 

[ZachShahan]

****, ****, ****. I need to find more cash to buy, this is incredible. Wish I wasn't so close to all in at 215 earlier so I could buy even more at these levels. Where to find some extra money...

Haha. Indeed

 

[Julian Cox]

Makes no sense to say 2.5m a year. That would need at least three more fully built and running at maximum GF. As of now the 1st phase of GF1 is still not completed.

What would you suggest would make sense if they accumulated the best part of a million deposited reservations this year?

I think it would make sense to all concerned (including capital markets, national governments offers from prospective partners etc) to throw money and capacity at Tesla to ensure supply meets demand and profits realized. It's a capitalism thing.

In my opinion Model 3 will appeal to a significant percentage of all automotive consumers by both out performing, out-classing, lowering the total cost of ownership and increasing resale value when compared with anything else available at the same price point and that will be true from base model upwards. Hence the average mid market+ new vehicle customer will likely seek to reserve it and forgo buying a new ICE vehicle and will do so in his or her own rational self interest. How many is that? Probably a lot.

 

[Fallenone]

Demand is certainly not a problem for M3, at least not by 2020 as I see it. But building the capacity to boost that much production, is a huge problem. I think it is already super difficult to meet the 500k at 2020. The key thing here is TSLA just doesn't have that enough cash to speed up the GF1, let alone building more GFs. If we were still in 2013 or 2014, it wouldn't be too hard to do secondary offering to raise more cash. But given the current macro, I really can't be that optimistic in their ability to raise more capital. Sure, it is likely they turn cash flow positive 2016 Q1, but the net flow would be too small to support projects like additional GFs and complete them before 2020.

Let's say they get 5X Model X reservations for the Model 3 in 6 months - thats 100,000. At 1000, that's 100 million. At 2000 thats 200 million. If 5000 of those are sigs at 15000 then we have 75M + 195M = 265M. But what if we have a +ve surprise and get 200,000 reservations? What will Tesla need to do? Now they have 450 million in deposits. Can they accelerate the Gigafactory to get to 500k by 2019 if they are infused with a boatload of free money? Can they increase their growth rate from 50-60% to 100% for a short while? Can they replicate the first phase on another continent? With the way things are going I think those are the questions Tesla will need to answer.

- - - Updated - - -

What you assume may be true if we're a few years ago with QE still going on, or if TSLA is backed up by the Chinese government. But we are off QE for one year and in a rate hike circle, and TSLA is not a state-owned enterprise.

What would you suggest would make sense if they accumulated the best part of a million deposited reservations this year?

I think it would make sense to all concerned (including capital markets, national governments offers from prospective partners etc) to throw money and capacity at Tesla to ensure supply meets demand and profits realized. It's a capitalism thing.

In my opinion Model 3 will appeal to a significant percentage of all automotive consumers by both out performing, out-classing, lowering the total cost of ownership and increasing resale value when compared with anything else available at the same price point and that will be true from base model upwards. Hence the average mid market+ new vehicle customer will likely seek to reserve it and forgo buying a new ICE vehicle and will do so in his or her own rational self interest. How many is that? Probably a lot.

 

[austinEV]

I really wish Tesla was buying battery making machines and putting them in the GF. Then we could discuss *their* capacity (the machine supplier) and get a feel for upsides and production rates. This "Panasonic will do it" thing is opaque and frustrating.

 

[ZachShahan]

Sometimes it may seem like all the projections are already built into the stock price, for example when we recently fell 7% the day after announcing 50K+ deliveries. But that is certainly not the case.

A simple calculation of 2020 financials would yield a valuation substantially higher today. Let's assume they sell 400K vehicles at an average selling price of $55K. Also assume they sell ~$1B in Tesla Energy this year and grow those revenues at 50% as well (will probably grow faster). Then assume that Tesla has absolutely no other revenue source (extremely unlikely). That's already $27B in revenues for 2020, on the VERY conservative side, a number that is already higher than the current valuation of ~$26.5B (implying a Price/Sales ratio of less than 1). Since Tesla's margins are about 2-3x those of their average competitors, TSLA will demand a much higher price/sales ratio than 1. Another key here is that Musk thinks revenues will continue to grow at 50% through the following five years, making over $200B in sales by 2025.

Another major reason it's obvious that all the future projections aren't built into the current SP is the short interest. Naturally, as Tesla continues to grow at ridiculous rates, grow positive brand awareness, meet all of these projections, and most importantly reduce the investment risk (successful completion of GF and M3) the shorts will begin to cover and move the SP up faster than if TSLA had a normal amount of short interest. At some point, Tesla will become a mature company with less than 5% short interest (currently well over 20%) and there will be some short squeezing along the way.

There is a lot of growth built into the SP and we may hover around the 200 level as long as the macro environment stays uncertain. However, I'm going to use this opportunity to load up at these levels because we will see substantially higher valuations by 2020. At that time, there will be "crazy" five year growth projections for 2025 just like we have today for 2020. Just be patient, don't invest money you need over the next couple of years, and enjoy the ride.

Excellent post. This x10.

Now, can you just suggest some other companies with such an obviously bright future that I can use to diversify my investments a bit? (Only very slightly joking.)