Short-Term TSLA Price Movements - 2016

[anticitizen13.7]

40 point drop into 2016. Raise your hand if you saw this coming. I sure didn't. The oil story is lame and dated. People expected oil to test this level for months. Let me guess, now that we have cheap gas people are abandoning their Tesla purchase plans.

I didn't foresee the 40 point drop this year, but it doesn't surprise me either. There is still a lot of skepticism in the general public about Tesla, and EVs in general, but that's par for the course with any shift in any major system. TSLA has fluctuated between 180 and 280 for much of the past 2 years, sometimes with rapid and unpredictable movement.

Promise?

I have to say that I've thought about spending less time here (although I wouldn't leave for good like tftf says they will). Emotions are clearly getting the better of people, regardless of whether they are ultra-bulls or trolls, and it's unpleasant having to scroll through pages and pages of stuff that ranges from unreasonable to angry to bs. I think it would do people a lot of good to read stuff in other sub-forums, like Model X. Look at the pics of deliveries. Read what people say (good and bad) about the new product. What goes on at the ground level is a hint of what's going to happen.

It's also nice to see the results of all the hard work: a product that actually got to the hands of a customer. That is what will ultimately drive stock price.

 

[MitchJi]

Yes. Exactly. Model 3 falls into BMW 3 series and Audi A4 space. These are the small luxury sedan space. The Germans sell 100s of thousand of units a year in these cars. Ten times more than their more expensive larger sedans.

I'll repeat what was said above, a BASE model will be $35k and very few people will buy the base model. Same thing happens with MS and MX.

IMO the M3 will have a similar impact to the MS on comparable models from BMW, Audi and Mercedes, plus Prius's and other Toyota and Honda Hybrids. And in the same way that the MS sold well to buyers who previously purchased less expensive cars I think the M3 will pull a lot of Accord and Camry etc. The difference is that the numbers of these will be much higher than the cars that are $5k-$12K less expensive than the MS. This should not be a surprise, we've already seen it with the MS.

At the Model X reveal, they did cover performance specs.

I had in mind the pack sizes (which I think will exceed the markets expectations), and the associated prices.

 

[Crowded Mind]

I have to say that I've thought about spending less time here (although I wouldn't leave for good like tftf says they will). Emotions are clearly getting the better of people, regardless of whether they are ultra-bulls or trolls, and it's unpleasant having to scroll through pages and pages of stuff that ranges from unreasonable to angry to bs. I think it would do people a lot of good to read stuff in other sub-forums, like Model X. Look at the pics of deliveries. Read what people say (good and bad) about the new product. What goes on at the ground level is a hint of what's going to happen.

It's also nice to see the results of all the hard work: a product that actually got to the hands of a customer. That is what will ultimately drive stock price.

+1, and I'm sure others feel similarly. Looked like things began to calm down a bit for a moment then the unnecessary rhetoric flared up again. I will hold out hope that the general level of respect that I have seen in the past for bulls and bears (even ones with agendas) will return.

Thanks, Audie, for the moderation. And thanks Jesse and Julian for the posts, I hope you both continue to share. This is a valuable place and I would hate to see valuable contributors like anticitizen put off from participating.

 

[FredTMC]

IMO the M3 will have a similar impact to the MS on comparable models from BMW, Audi and Mercedes, plus Prius's and other Toyota and Honda Hybrids. And in the same way that the MS sold well to buyers who previously purchased less expensive cars I think the M3 will pull a lot of Accord and Camry etc. The difference is that the numbers of these will be much higher than the cars that are $5k-$12K less expensive than the MS. This should not be a surprise, we've already seen it with the MS.

thanks Mitch. YES, I completely agree that Model 3 will pick up tons of buyers from other car segments too (not just BMW and Audi buyers). We've clearly seen this happen with Model S. Buyers of Model S come from ALL segments. It's crazy and beautiful

I've very optimistic on Model 3 appeal and sales success. It'll be huge and have a solid effect on TSLA stock price

in the very short term, I remain very cautious about the macro market. It'll have a very negative short term effect on TSLA if Markets tank from here. Hopefully, we get a bounce off key levels instead.

 

[30seconds]

I'm tracking the ongoing US, UK & EU Emissions testing as it may lead to much higher technical hurdles across all ICE companies. Seems that France is conducting "real world" testing any now starting inquires to a number of manufacturers. I think this may end up meaningful to Tesla as it will continue to set EV (and EV leadership) apart.

Ford and Mercedes also to be inquired alongside Renault in emissions probe

 

[Zhelko Dimic]

IMO the M3 will have a similar impact to the MS on comparable models from BMW, Audi and Mercedes, plus Prius's and other Toyota and Honda Hybrids. And in the same way that the MS sold well to buyers who previously purchased less expensive cars I think the M3 will pull a lot of Accord and Camry etc. The difference is that the numbers of these will be much higher than the cars that are $5k-$12K less expensive than the MS. This should not be a surprise, we've already seen it with the MS.

I anticipate M3 will do better in its category than Model S does in its own. It will hurt BMW/Audi/Merc a lot.
Why? Because there is already halo effect from Model S. Model S was much bigger unknown, and Tesla wasn't recognized luxury brand. Now it is. Not everyone knows about Tesla, as opposed to BMW, but anyone that gets in touch with Tesla will immediately recognize it as a luxury brand.

And, Tesla can play any game it wants - imagine Tesla M3 with 700hp vs. BMW M3 with 425hp?

That is comparison article waiting to be written in _every_ car magazine and every car section of the newspaper, throughout the world. And it's one that public and editors can't wait for. I can't wait for it. Someone finally betters almighty BMW M3 that has dominated sports sedan market since 1988 or so! And it's a small manufacturer from the left field, underdog.
I anticipate Tesla wont just beat BMW M3, it will annihilate it.

Incremental cost for Tesla to make better sport sedan is much smaller than for BMW, and BMW has also enjoyed its M3 as a profit center that improved only as much as needed. Now this profit center and brand ambassador would be under attack on both performance and price, should Tesla wish so.

This is the place where one build brand image that will supply buyers for the next 20 years. I hope Tesla does it. They've always been ahead of me, so I don't think that changes , and they see this, or better opportunities.

 

[Spidy]

That is comparison article waiting to be written in _every_ car magazine and every car section of the newspaper, throughout the world. And it's one that public and editors can't wait for. I can't wait for it. Someone finally betters almighty BMW M3 that has dominated sports sedan market since 1988 or so! And it's a small manufacturer from the left field, underdog.
I anticipate Tesla wont just beat BMW M3, it will annihilate it.

I have my doubts that the Model 3 will have much better cooling than the Model S.

 

[LargeHamCollider]

Out for good.

Cum peius credere cernis

 

[dc_h]

What is the collective wisdom regarding 4th quarter earnings and 1st quarter guidance? Revenue should be strong, but cash flow seems like it should be challenging. They had to staff up for X production and the doors and back seats have held back production and probably increased service center overtime, where final adjustments have been needed. I think Q1 will be much stronger, but they are still working out some final manufacturing issues, based on anecdotal Model X stories. This seems to push FCF out to Q2, but hopefully to a very close to FCF in Q1?

I think a minor bump would come from delivery reports ramping up and going over 500 per week. Another bump would come from positive guidance from Tesla Power deliveries. Powerwall in Hawaii and a few other regions should absorb Powerwall capacity, but the real cash flow for the next year should be in commercial systems. If they were to produce 1bn from the GF, that will deliver cash flow and push revenue growth over 70% for 2016. The next bump would be continued guidance for Model 3 reveal at the earnings call. The biggest bump would be OPEC pulling back production, or reports of reduced production in N. America. No one wants to be the first to blink, but Saudi Arabia could make twice as much money selling half as much oil. Sooner or later someone is going to do the math. Some trigger will be needed, hopefully something proactive and positive.

Model 3 orders over are a little more medium term for this thread, but it seems likely this will be an a-ha moment for the skeptics that this is not a cult car or stock anymore. Assuming macro issues chill out by March, April should be a good month for TSLA.

 

[FredTMC]

What is the collective wisdom regarding 4th quarter earnings and 1st quarter guidance? Revenue should be strong, but cash flow seems like it should be challenging. They had to staff up for X production and the doors and back seats have held back production and probably increased service center overtime, where final adjustments have been needed. I think Q1 will be much stronger, but they are still working out some final manufacturing issues, based on anecdotal Model X stories. This seems to push FCF out to Q2, but hopefully to a very close to FCF in Q1?

I think a minor bump would come from delivery reports ramping up and going over 500 per week. Another bump would come from positive guidance from Tesla Power deliveries. Powerwall in Hawaii and a few other regions should absorb Powerwall capacity, but the real cash flow for the next year should be in commercial systems. If they were to produce 1bn from the GF, that will deliver cash flow and push revenue growth over 70% for 2016. The next bump would be continued guidance for Model 3 reveal at the earnings call. The biggest bump would be OPEC pulling back production, or reports of reduced production in N. America. No one wants to be the first to blink, but Saudi Arabia could make twice as much money selling half as much oil. Sooner or later someone is going to do the math. Some trigger will be needed, hopefully something proactive and positive.

Model 3 orders over are a little more medium term for this thread, but it seems likely this will be an a-ha moment for the skeptics that this is not a cult car or stock anymore. Assuming macro issues chill out by March, April should be a good month for TSLA.

Q1 guidance must include FCF positive. No reason it shouldn't. All the build out for MX was in 2015. Tooling, employee ramp up, etc. It's time to show FCF. Q1 will definitely contain a solid ramping of MX. These Signature MXs are high price and increasing margins as production ramps.

I wouldn't read anything into slow initial production of MX in January. they're producing a lot of MS for overseas right now

 

[Zhelko Dimic]

I have my doubts that the Model 3 will have much better cooling than the Model S.

Fair comment. For what is worth, in real world, it doesn't matter, and on the track, BMW M3 is pretend track car, not much more usable than Tesla in stock form.
But that's _not_ widely known fact, and most journalists wouldn't know better (I'm car track addict), and BMW picks up marketing points there.

However, I feel there is palpable wish to dethrone BMW M3, so that journos can say: see BMW doesn't win always, we're independent...
Beat couple of Lambos, Ferraris, GT-Rs in acceleration test, destroy BMW M3 in the same, offer it for $60K and legend is born.

 

[dakh]

They could also produce a two-seater supercar that would be a legit track car or just outaccelerate everything with such margin that the internal combustion folks would just stop trying. The speed at which power matters more than traction is getting higher and higher with all the stupid powerful motors out there but electric motor has an advantage in grip.

 

[jhm]

Not sure about everyone else, but I'm getting frustrated with the market models that are auto-correlating oil prices and market prices. ETF and automated trading programs have built in correlation models that seem to be exacerbating market moves. CNBC has also been ranting about the destruction of the oil industry, as if the boom bust cycle was something new. Oil's decline benefits chemicals, shipping and airline sectors. It may put pressure on alternate energy sources, but long term is due in large part to efficiency improvements and renewables. If renewables and EV's are going to be successful, this interplay will need to be better understood by the market. Right now, commodity deflation may be caused by China moving to a service economy and internally driven growth, or it may be caused by a recession that already started in China in 2015, but not fully understood by markets, decision makers and information consumers (people like us).
I think the China economy transition success or failure is a big unknown hanging over the market. The market is trying to understand and articulate what is happening. Based on China's demographics and stage of development, long term growth should be shifting to 5-7% and trending toward a longer term 3-5%. Future growth will hopefully be picked up by India and Africa.
Anyhow, oil pressure is causing market pressure which puts pressure on the dollar. Another tough macro day. Hope for a rebound, but worried we'll continue this macro pressure without a large catalyst.

Global investment in renewables hit record $328.9B in 2015 as new markets opened | Utility Dive

It will happen. Last year $329B was invested into wind and solar. Installation GW were up 30% y/y, but investment dollars up just 6%. So that implies a huge decline in cost.

So the rub is that more was invested in renewables than fossil fuels, and all fossil fuels are in gluts with severely depressed prices.

So investors had better figure this out in a hurry. The money is going into renewables, while fossils just don't seem worth investing in at all.

 

[chickensevil]

I'm tracking the ongoing US, UK & EU Emissions testing as it may lead to much higher technical hurdles across all ICE companies. Seems that France is conducting "real world" testing any now starting inquires to a number of manufacturers. I think this may end up meaningful to Tesla as it will continue to set EV (and EV leadership) apart.

Ford and Mercedes also to be inquired alongside Renault in emissions probe

It just gets bigger and bigger. How long have all these companies been cheating the system?


Don't make these guys pay money, don't even make them fix the cheated cars. Make them make Zero Emission cars. Tell each of these cheaters that because they couldn't be trusted to make less emitting vehicles (and actually made worse emitting cars that were branded as "clean") that they are henceforth banned from making *any* emitting vehicles and are only allowed to makes ZEVs from here on out. Whether it be Electric (yes, please) or Hydrogen, or something else.


Give them each 10 years to transition (they all have the cash if they would just do it... especially VW, Ford, MB, and Renault) and at the end all their cars must be ZEVs or they will be fined up to 1M$ per month on a sliding percentage (if they are selling 50% of their cars as ZEVs then only fine them 500k) until they either make the cars we know they could make if they tried, or they go bankrupt.


Think this is harsh? Ford got a 5.9BN$ loan from the DOE to make Zero or Low Emitting vehicles and Nissan (Renault) got 1.6 BN$ (the same program everyone tries to give Tesla crap for which was a fraction of those amounts, and Tesla is the only one to have repaid the value... but I digress). VW is sitting on over 15BN in cash (and 350BN in assets). Daimler (Mercedes-Benz) has 10BN in cash. They are *NOT* poor...

 

[sundaymorning]

Thanks austin. Great summary. I agree with thesis. I can't wait to get to EC and M3 reveal

My heartburn right now is simply the market macros. Looking forward to seeing markets stabilize into Feb Earnings call

As a bullish long, I am right in there with you guys. With the way the market has reacted, we can't expect short term traders to be happy. Short term traders are by extension, uber Bulls or bears who are looking to cash in big, they are looking for the homerun... I don't see the macros falling off a cliff, mainly because China's GDP was largely inline with estimates; 6.8% is still pretty darn good. That is over 300% more than the US GDP growth; I just don't see the world economy spinning out of control to justify another heavy drop. IMO The selling pressure has largely been overblown. We are near the 52 week low and this is where bargain hunters start to get itchy.. As for the parallels with 2013, I can definitely see it. I remember when we missed deliveries in late 2012 and guided down further 4th Q, the stock was quickly punished and the rest is history. If we are making progress on the X front, then CC should be wonderful. I personally hope they guide for 75k. Good luck to all, I depend and appreciate your information to place my bullish bet.

 

[Lump]

US equity futures -1.5%, S&P 500 trading below last summers lows.

 

[FredTMC]

US equity futures -1.5%, S&P 500 trading below last summers lows.

Ummm. Yep.

 

[TSLAopt]

Ummm. Yep.

it just occurred to me that the best way to play TSLA exposure for the short term if one believes the market is in a serious downtrend here (without getting out) might be to just short some oil stocks...I believe most major oil stocks have gone down as much, if not more than TSLA in recent weeks. I may do this actually...just need to figure out which oil stocks

HES, BP, XOM, any others bellwether oil stocks to look at people can think of off the top of their head?

 

[McMuggets]

Or maybe go long the next energy boom: An increasingly precious metal | The Economist

Tesla is mentioned in this article here. Significantly for the upcoming Gigafactory.

 

[allz]

There is still the currency issues which isn't just the case for Canada, but also Europe. At the moment a $35k Model 3 would be almost be 40000€ here in Germany, 10k more than a 3-Series almost at the base price of a 5-Series. Now not that those sell bad either, but in the end it will also depend what you get for your money. Especially competing with Mercedes new E-Class won't be easy.

Why would it be so?
If MS 70 is 70k$ in US and 70k€ in Europe - then why M3 would be 35k$ and 40k€ - how so?