Short-Term TSLA Price Movements - 2016

[BobSk]

Listened to Left. He argues from personal incredulity. Good luck with that.

Recently when this Andrew Left openly called everyone to short TSLA at $190, I found he didn't have a clue about Tesla. Nothing he said on TV made sense to me. As soon as the stock went above his short entry, my trade went in. This time he again showed he really knows nothing about Tesla and Tesla cars. Everything he said is wrong. Good luck with it.

 

[The Blue Owl]

This is Andrew Left explaining how "all the great shorts were run over in the beginning".

That's the spirit, Andrew. Keep on keepin' on!

 

[BobSk]

Would like a new headline that says Andrew Left left Citron. Right, right??

Left is not Right.

 

[FredTMC]

Thank you.

Also, is anyone preparing for a massive surge following the announcement of new M3 res numbers?

Not really. At this point I'm expecting the reservation number is largely baked-in. (whatever the reservation number is today)

However, If Elon adds more specifics about increasing production or moving up launch date, that may act as a further accelerant

 

[FredTMC]

So as on ongoing due diligence in my TSLA investment I feel it's important to hear and listen to what prominent shorts say. Granted, the interview with Andrew Left was short but this is what I heard:
- He is short at this price due to fear of future lack of profitability. Hard to argue with because so many variables go in to a valuation model. I disagree with his model.
- He said the S sold at 90k when it was supposed to be a 50k car. Same with X. Thus he doubts a 35k Model 3 and that it will be profitable. My interpretation is he thinks he has uncovered that Elon and Tesla are liars, he builds his short thesis (sometimes very successfully) on uncovering lies and fraud. In this case he's completely wrong.

I'd also invoke common sense: it's not like Model S buyers thought they were buying a 50k car but then the invoice said 90k. People didn't want the lower priced car. It's better for the company to sell cars with higher ASP and higher margins, it gives more revenue. His judgment is clouded so he misses pure facts.

Ya. No smokescreen Mr left regarding ASPs. Elon commented again on last ER that initial deliveries of Model3 will be highly optioned cars (just like launch of MS/MX).

 

[BriansTesla]

If Musk really does want to raise capital before 1Q ER, then April 2016 might unfold like this:

STEP 1 Unveil Part 1 (done)

Message for potential customers = VALUE
Reservers are early adopter types.
Cumulative reservation total increasing
​

If Musk announces the date for Unveil Part 2 anytime in the next few days,
IMHO, it will be a strong indication of a raise before 1Q ER.

Cumulative reservation total is rising during STEP 1 to N, say, at the moment of...​

STEP 2 Unveil Part 2

Message for potential customers = SUPER NEXT LEVEL (Musk's term)...
Reservers will again be early adopter types.

Cumulative reservation total increases during this step by a factor of 3 *, to 3xN, whereupon...
​

STEP 3 Announce cut-off date for M3 reservations

Message for potential customers: Sorry, we need to limit M3 production and then plan our expansion so we will have capacity in reserve to launch new products, pick ups, vans etc. Other automakers may also be planning compelling mid-price sedan EVs, but if you really think you will want an M3 please order before the cut-off date (April 30... end of month perhaps?).

Reservers during STEP 3 will be mainstream types ( who notice no chance of getting anything this good from other automakers)

Cumulative reservation total increases even more rapidly than in STEPS 1 & 2, while...

STEP 3.5: Official Gigafactory Opening Event takes place.

Message for Investors: Execution is good.
GF Module 1 is already producing Battery Packs on spec much more cost efficiently than Fremont.
Hint of reasonable to good margins on Tesla Energy Products.
​

Cumulative reservation total increases during STEP 3 by a factor of 5 ** at cut off, to 15xN, whereupon...​

STEP 4 may be initiated around the cut-off date, possibly a little earlier to get it settled before 1Q ER:

Raise equity capital (comparable to sum of deposits, perhaps) at highest supported SP *** (lowest dilution)
​

STEP 5: (in May)

Q1 ER: Tesla explains how it can accelerate construction of GFs and create M3 production lines in Fremont and elsewhere. The company's forward looking statements will not be treated with skepticism because it will be already sitting on a mountain of new equity capital and a 0% loan facility (customer deposits) sufficient to spur much faster growth.
​

* "Super next level"...these are Musk's words. I give him the benefit of the doubt and assume that whatever features will be unveiled they will be so compelling that another N early adopters are sucked into the reservation line. Also, because word of M3 is still diffusing through media and by word of mouth to populations that have never heard of Tesla, I have credited another N early adopter reservations simply due to the time effect of the ever growing Tesla awareness during STEP 2. That brings us to 3xN.



** In any population adopting something new, the mainstream cohort will be much more numerous than the early adopter cohort. Active posters to this forum are mainly of the early adopter type, who may not fully appreciate that an incentive is needed to get mainstream types to reserve (otherwise they would also be called early adopters). Fear of missing out on a perceived 'can't afford to be without' type of product may be the perfect incentive. And because the mainstream cohort is so numerous, my multiple for their contributions to reservations numbers is 5, so bringing the cumulative total to 15xN at the cut off date.



*** Impossible to guess even, but $TSLA may spike at ridiculous levels and then fall back to a new support level very much higher than all current price targets. Some positive factors to consider:

Shorts covering
Some capital fleeing major automakers may land on Tesla.
Analysts will probably try to completely remodel Tesla (after GF opening) boosting price targets to match their new models.
New reservers taking a position in TSLA. (Average of only 1 share per reserver, say, could amount to 7.5m**** shares).

​

**** Suppose N is about 500k (not too far-fetched with todays information, I hope most of you will now be in agreement on this).
Then if my multiples of N are reasonable (Many TMC members may have difficulty here because they are almost certainly in the early adopter cohort, not recognising perhaps that mainstream types need an incentive to act), it follows that we could have 15xN = 7.5m reservations by the cut off.

[If Musk will announce Unveil Part 2 in the next few days, the remaining steps are likely, IMO...
Which brings me to my WAG of 10m reservations by the cut off. I'm optimistic. Absolute max is probably ~ 20m, thereby sucking many years' worth of mid-price sedans off the forward sales assumptions of all of the major automakers. Either way, April will be interesting]

​

Great ideas here!

What about the possibility of TM announcing a date at which reservations will be open to as many from one person/company as they wish?
Uber, etc.

 

[FredTMC]

$261. HOD pop

 

[BobSk]

Great ideas here!

What about the possibility of TM announcing a date at which reservations will be open to as many from one person/company as they wish?
Uber, etc.

If Tesla removes the ordering limitation, the backlog will increase several million in a day. It's perfect for car rental companies and taxi companies. Uber would reserve a million of them alone. I think if the goal is to make money, Tesla should close the reservation, use the additional cars to provide Tesla shared services. Each car can earn 20k a year for Tesla.

 

[Ukland Wombat]

Great ideas here!

What about the possibility of TM announcing a date at which reservations will be open to as many from one person/company as they wish?
Uber, etc.

Thanks for your comment here.

You have just awakened me to the possibility that this two M3 per person limit could be a hint to Musk's possible intention of soon closing off reservations at some yet to be announced cut off date. Then once the reservation list is actually closed, those who missed out will not have to be upset that some more canny individuals got in with orders for say, 100 M3!

 

[tanner]

I wouldn't even dare to guess because there are opposing trends in play:

Diminishing rate (of reservations per hour) because most early adopters who know of M3 have already reserved.
Increasing rate because knowledge of M3 is still diffusing into the enormous population group that has never heard of Tesla, the automaker.

The number alone will be interesting, but even more interesting IMO will be Musk's comments (if any) that come with it.

There will be comments, rest assured.

 

[AudubonB]

Left in the dust.

My read of Andrew Left's Tesla comments are the classic - because logically unimpeachable - "If you liked to short TSLA at $35....$70...$150...then you'll love to short it at $260."

They are the other side's equivalent of "If you liked SunEdison at $35, you'll love it at 35¢."

Except the beleaguered SUNE long can lose only 35¢ per share. The TSLA short? We all know the answer to that.

Unimpeachable logic does not translate into sound investment practice.

 

[sunhelm]

I think one positive indicator that Model X supply/production problems have been finally addressed is when the Model X Design Studio opens up to everyone. That, and the increasing retweets by EM on Model X reviews signals they are truly ready for prime time.

Chalk that one up to one more SP catalyst.

 

[tinm]

Great ideas here!

What about the possibility of TM announcing a date at which reservations will be open to as many from one person/company as they wish?
Uber, etc.

I was thinking about Uber right from the start, when Elon tweeted they may have to rethink their production schedule. What if Uber or Uber-like businesses have already privately indicated to Tesla that they'd do a major "fleet buy" of the 3? What if that number, now added to the public 3 reservations, puts the total demand for the 3 way over 500K vehicles? They need to get a new factory going asap, seems to me.

 

[tanner]

Sitting on some good profit now. Kind of nervous to hold until E's tweet(s), but that could still spike it even more IMO. Any thoughts? Thanks!

 

[Ukland Wombat]

I was thinking about Uber right from the start, when Elon tweeted they may have to rethink their production schedule. What if Uber or Uber-like businesses have already privately indicated to Tesla that they'd do a major "fleet buy" of the 3? What if that number, now added to the public 3 reservations, puts the total demand for the 3 way over 500K vehicles? They need to get a new factory going asap, seems to me.

If Musk can see Tesla eating Uber's lunch at any time in the future, then Uber is the last customer he wants to take orders from. So that is another good reason to limit each person to two reservations.

 

[BobSk]

I was thinking about Uber right from the start, when Elon tweeted they may have to rethink their production schedule. What if Uber or Uber-like businesses have already privately indicated to Tesla that they'd do a major "fleet buy" of the 3? What if that number, now added to the public 3 reservations, puts the total demand for the 3 way over 500K vehicles? They need to get a new factory going asap, seems to me.

The recent rumor that Uber signed the intent to buy 100,000 Mercedes S class is an indication they are upset that Tesla refuses to sell them model 3. In 2 years Tesla's model 3 will have autonomous driving or very close. What if it works at that time? Why would Tesla sell the cars to another company instead of doing their own shared services? The shared services business can earn $8B profit a year without car drivers. Most people who reserved model 3 don't anticipate autonomous. Elon said in 2 years you can summon your car from anywhere in the country. Isn't that another way to say full autonomous?

 

[CatB]

Electric Windows, simple mechanical handles work just fine.
Given the obesity epidemic, these help.

Roll-up windows? that's classic-retro - goes well with 8-track tape drive too. Fie on these modern gimmicks that sell cars like hotcakes ;-)

 

[PaulusdB]

Mind you, fleet sales of Model 3 are already taking place.
E.g. this Dutch consortium ordered 1,000 Model 3 and is leasing them out individually.
As we speak there are 184 cars left.
TeslaModel3Lease | TeslaModel3Lease

 

[Johan]

Left in the dust.

My read of Andrew Left's Tesla comments are the classic - because logically unimpeachable - "If you liked to short TSLA at $35....$70...$150...then you'll love to short it at $260."

They are the other side's equivalent of "If you loved SunEdison at $35, you'll love it at 35¢."

Except the beleaguered SUNE long can lose only 35¢ per share. The TSLA short? We all know the answer to that.

Unimpeachable logic does not translate into sound investment practice.

Probably something has changed with regard to the company's outlook as it went from $35 to $250. In all fairness Left said that in the market, every day is a new day. Guess what, he was wrong yesterday and he's wrong today.

 

[BobSk]

I think one positive indicator that Model X supply/production problems have been finally addressed is when the Model X Design Studio opens up to everyone. That, and the increasing retweets by EM on Model X reviews signals they are truly ready for prime time.

Chalk that one up to one more SP catalyst.

It could also indicate the X reservation to conversion rate is not that high. The ramp is fine, that's the good news.