Welcome to Tesla Motors Club
Discuss Tesla's Model S, Model 3, Model X, Model Y, Cybertruck, Roadster and More.
Register

Short-Term TSLA Price Movements - 2016

This site may earn commission on affiliate links.
Status
Not open for further replies.
Aren't the energy storage cells to be made at Panasonic Japan and the energy storage battery packs made at Gigafactory1? The original 35 gwh of cells to be made at Gigafactory1 were intended for Model 3 battery packs. Looks like any additional battery cell capacity at Gigafactory1 will be needed for the accelerated ramp of Model 3.

For now yes and 35gwh is set aside for the 3. However, JB and EM did just confirm that the current GF can accommodate more than that. I think someone posted that confirmation upthread.
 
BTW, talking about institutional ownership of Tesla, the 13-F for the Q1 are due by May 15, but some already filed them.

Bank of Montreal added a whopping 4,301,378 shares in Q1, and the second largest holder, Baillie Gifford added 1,214,583 shares. That is 4.2% of all outstanding shares just between two of them!
 
Last edited:
BTW, talking about institutional ownership of Tesla the 13-F for the Q1 are due by May 15, but some already filed them.
Bank of Montreal added a whopping 4,301,378 shares in Q1, and the second largest holder, Baillie Gifford added 1,214,583 shares. That is 4.2% of all outstanding shares just between two of them!


Institutions + Elon hold 93M + 29M = 122M shares, out of a total of 132M. That is just 10M for the rest. Wow.
Last reported number of shares short was 29 M. (Source nasdaq.com).

Hmmmm.

I am glad I am not among these 29M, at the mercy of the 122M combined shares held by Elon (who will not sell at any price) and these institutional share holders who (for a good part) are likely in for longer term as a strategic investment.
 
Last edited:
I've been thinking about the massive scepticism Tesla have been met with after announcing the new goals. And not only from the shorts but in the financial media, from analysts and from many longs - including quite a few on this message board.

I believe the cognitive error here is people aren't properly listening to what Elon is saying. The man makes a point of speaking clearly and as unambiguously as possible. He is very clearly telling us that we mustn't reason from analogy using Model S or X as reference - the Model 3 is, and had always been the mass market car. The mass market car was always going to be designed with ease of manufacturing as perhaps the number one priority. This is something else completely from S and X which fulfilling some very different purposes for Tesla.

That manufacturing has been the end game has been in the cards for a long time. Just consider the core terminology that has been used previously:
- Making the machine that makes the machine
- Vertical integration
- The Gigafactory as a product
- S-shaped production ramp curves

And now:
- We want the best manufacturing talent in the world to come work for us
- Our focus is on mastering manufacturing of large complex objects

Ramping from 100 cars/week to 1000/week is just like ramping from 2000/week to 20000/week (1 million/year): mathematically it's a 10-fold increase. Yes, I know sceptics will say it's very different but really, if one does reason from first principles the only difference is in the frame of reference. Yes, the requirements for capital, staff, raw materials, energy etc. are much larger in absolute terms - but so what? There is definitely enough capital in the ever growing world economy to support this growth (and it is in the nature of capital to always seek out and be attracted to growth), enough people to staff Tesla, enough steel, aluminium and Lithium in the world and plenty of abundant energy free for the taking (solar). In relative terms (per car or per dollar of revenue) all the requirements mentioned above are actually going to be reduced to some extent thanks to the inevitable positive effects of economies of scale.

If you are a person working hard to make humanity a multi planetary species sooner rather than later you're not going to let neither capital requirements, access to raw materials nor energy limit your thinking. One of the main points of expanding beyond Earth, alongside mitigating existential risk, is to grow our access to resources. For all we can tell there seems to be virtually unlimited quantities of manipulable matter and harnessable energy in the universe. It is in the nature of humanity as a species to strive for control of more and more of this matter and energy. We are still in the cradle, barely scratching the surface of this planet, harnessing minuscule quantities of our nearest star's energy. Elon knows this and is able to look further in to the future than most. This is why he is able to understand that every 10-fold ramp in production is equally hard, not 10 times harder per step.

My belief is he has some main goals with Tesla (both with the car business and the energy/battery business):
1. Mastering complex manufacturing on large scales including mastering of rapid expansion of manufacturing with sustained quality
2. To attract the best human capital, the brightest minds in engineering and manufacturing
3. To come to control massive amounts of economic capital

1, 2 and 3 are all needed to orchestrate and facilitate the process of making humanity a multi planetary species. This is the end game.

As substantial bonus goals along the way he gets:
1. A rapid switch toward sustainable transport on Earth.
2. A catalyzation of the advent of a fully renewable energy supply for Earth.
3. Massive attention to him as a person which means the power to open people's eyes and minds to the end game goals (he is going about this carefully and subtly but if you pay attention you'll notice that he has a very clear communications strategy).

Bonus goal 1 and 2 both help in a big way to counteract the risk of failing the main objective due to destruction of the cradle planet's biosphere/ecosystem occurring before the multi planetary colonization is firmly underway.

Edit: Unfortunately posted this in the wrong thread, should be in long term TSLA thread. If this is seen by a moderator, please move. Thanks.
 
Last edited:
Do we know for certain that there will be significant CAPex spending in Q2? I am of the opinion that they will make Q2 the watershed quarter to prove that Tesla is profitable based on Q2 deliveries+TE. As vgrinshpun projected based on conservative assumptions, it is indeed possible.

So could the plan be, silence the doubters in Q2, SP skyrockets, then get investors on the table for a new offering and Capex begins Q3 and onwards?

They said the want to start spending from June which is Juliy = Q3 - which probably leaves Q2 in the clear.

If this is the plan:

Then the massively stupid thing that has hapened here is that they told the Bears their spending plans and revised.guidance in advance of that Q2 ER based raise which they absolutely did not need to do. Not unless it was somehow imperative in a good way to raise money three or four months sooner in a poor market for TSLA. Perhaps Musk etc actually imagined that market hubris for the Model 3 would rip the stock to an ATH regardless of Q1 results and a mea culpa on Q3 and Q4 but I cannot get my head around a man whose intellect I hold in the highest regard making an error of judgement like that. If he still plans to raise on Q2 ER he needs better help than he has. If not they must be raising sooner - which of course they can do as previously described. There is an optimum strategy option on the table here which normally describes what Musk does.

Back on the whole Q2 ER raise thing. Every company is free to revise or ignore its own guidance in light of material changes that occur after ER from the second the phones hang up on Earnings Call. Standard disclaimer. What is more Tsala has a fabled history of doing exactly that. In 2013 they even went as far as to declare no raise unless opportunistic and raised 3 or was it 6 days later before revising guidance, hence the short squeeze.

They were at complete liberty to hold Q3 and Q4 FCF and Profit guidance all the way through Q2 ER in Agust and mash the shorts to a flipping pulp. Do a raise and then revise guidance in that order. They for some reason chose not to do that. Probably a good one.
 
Last edited:
Isn't there some kind of rule about having to release information material to the share price or something similar - therefore, once they decided to bring production forward, which would inevitably impact on Q3 and Q4, aren't they obliged to release that information.

Surely they cannot simply make promises about the future, when they know them to be untrue?
 
Isn't there some kind of rule about having to release information material to the share price or something similar - therefore, once they decided to bring production forward, which would inevitably impact on Q3 and Q4, aren't they obliged to release that information.

Surely they cannot simply make promises about the future, when they know them to be untrue?

Yes and no. They could give false information, or withhold information, under the pretence of still believing guidance (for example) or not yet having made a firm decision on production goals (for example).

But it is my belief that Elon and Tesla hold themselves to a higher standard than this - stock price in the short term be damned.
 
Institutions + Elon hold 93M + 29M = 122M shares, out of a total of 132M. That is just 10M for the rest. Wow.
Last reported number of shares short was 29 M. (Source nasdaq.com).

Hmmmm.

I am glad I am not among these 29M, at the mercy of the 122M combined shares held by Elon (who will not sell at any price) and these institutional share holders who (for a good part) are likely in for longer term as a strategic investment.

This piece of news should go viral. All the technical shorts will want to bail post-haste. I'm also curious how many other institutional investors jumped in recently or will jump in just to squeeze some shorts?! Are they legally allowed to?!
 
  • Funny
Reactions: SW2Fiddler
Let's see, a million cars at 50K @, that would be 50 billion in annual revenues (higher with Tesla Energy added in) by 2020, just four years from now. 2015 annual revenues were four billion, meaning we are going up 12.5-fold in five years. We have seen a stock price around 230 for more than two years. When does the market price in the incredible expansion that is coming? $2,300/share is a 10-fold increase. A similar scenario drove the stock price from 35 to 290 during the Model S ramp.

It really boils down to market expectations and the trust that it has in Tesla. This will not change over night.

Long-term, we will most-likely see a 10-fold increase in the SP, just not over the next 5 years. Tesla can no longer shock the market and grow over 4x in one year like it did in 2013. The run-up in TSLA was driven by a complete shift in what the market believed their potential could be based on their ambitious goals. Since then, the market has learned to take guidance with a grain of salt, and the stock has consolidated over that time frame. Tesla has missed delivery guidance in back to back years, which caused many to seriously doubt their 500k delivery goal by 2020. Tesla hasn't done anything to gain its trust, yet they just doubled their already "outrageous" goal to about 1 million deliveries in 2020. Anybody who previously doubted them is sure to feel more strongly about their new goals - even most of the forum members don't see them achieving that milestone in just four years.

This level of skepticism is the only reason why the stock didn't react positively to the huge raise in guidance. However, the argument that Musk is a liar, or that he is way over his head, is just incorrect. Their guidance the last two years (also believed to be impossible at one point) were best-case scenarios, and they came very close both times, only missing by about 10% each year (32k vs 35k & 50k vs 55k). Additionally, many tend to forget that they are not always overly optimistic. The original goal was for Tesla to sell 40,000 Model S and X combined. They clearly underestimated demand and were off by a huge magnitude. That is exactly what's happening now with the Model 3, as they initially underestimated demand and had to seriously revise guidance. If Tesla is only off by 10%, meaning 450k deliveries in 2018, or anywhere near that number, they will once again shock the market who currently has no faith in the company's goals. Once they achieve, or come close to achieving, the goals that they have laid out in the coming years, the market will reward them, shorts will cover, and the stock price will appreciate greatly.
 
I'm starting to think that the reason Musk went about things this way with the ER is really about telling prospective buyers that haven't put down deposits that they should get in line. By announcing such a large production increase, it helps allay the fears that people won't get their cars for eons. It might even be possible some of those in the U.S. that haven't put down their deposits to still get a full tax credit, depending on regional allocation, production rates, and sales of the S and X. After all, the cheapest financing is getting deposits.

I'm guessing about 200,000-220,000 Model 3 U.S. owners can get full tax credits, so assuming 45% of the 400,000 reservations are in the U.S., then 180,000 are in the U.S. There's maybe 10 to 30 thousand more that can get full tax credit. I am assuming that about 60,000 Model 3's delivered to U.S. customers in 2017, Tesla crosses 200,000 vehicles sold to U.S. customers on Jan 2, 2018. Then about another 140,000 U.S. customers in Q1 and Q2 of 2018 get the full tax credit. It comes down to how many Tesla wants to deliver to the U.S. versus the rest of the world.

It would be interesting if Tesla sells more Model 3's in 2017 than Chevy sells of the Bolt.
 
Last edited:
Wanna bet?

If he started 8 months ago. ;) I'm sure the skeptics here would assume they were not done in a day, even the good Lord took seven for the universe.

I am sure Musk's critics would also question his fecundity but we can establish the outer limits of what might be conceived from a Scientific American article appearing many years ago listing the sperm count for any single conception by species. Men come in at a respectful 60,000, while a pig matches this with a ten bagger. Both of these mammals shine compared to an ant with one or two per egg. SciAm did not make any estimate for larger mammals like a whale. But pound for pound the sperm whale is tops in terms of equipment.

But now I'm sounding like a well-known presidential candidate, as though we are in competition with other species.
 
Last edited:
Do we know for certain that there will be significant CAPex spending in Q2? I am of the opinion that they will make Q2 the watershed quarter to prove that Tesla is profitable based on Q2 deliveries+TE. As vgrinshpun projected based on conservative assumptions, it is indeed possible.

So could the plan be, silence the doubters in Q2, SP skyrockets, then get investors on the table for a new offering and Capex begins Q3 and onwards?

I wonder about this too. Almost totally absent from the letter and call was talk of tesla energy, and my understanding is that there is a great deal of demand for it and probably a lot easier/faster to "ramp" than cars if all the components are ready. Seems like they are aiming to have record revenues for Q2, it would be nice to know more about the energy side when it comes to the bottom line.
 
  • Like
Reactions: sunhelm
This piece of news should go viral. All the technical shorts will want to bail post-haste. I'm also curious how many other institutional investors jumped in recently or will jump in just to squeeze some shorts?! Are they legally allowed to?!

Viral News? Think you might be the last man alive to catch on. Been explaining this to people on and off for years including several times this year. This is why TSLA trades on what the shorts make of the news, not the longs. At best it trades on what the shorts think the longs think of the news.
 
  • Disagree
Reactions: Bet TSLA
I can't help thinking that this buying opportunity ($210) is even better than the most recent buying opportunity ($140s). The 140s opportunity was one of the best. But this $210 opportunity, I think, is probably better because it's POST-Model 3 reveal with 400k reservations, which proves demand high enough to fuel Tesla growth for the decade to come.

I agree 100%. I had NO PLAN to add to my core shares because I'm already too heavy in Tesla. But as an investor, you have to constantly re-assess with new data. The ER call, with the announcement that the Tesla timeline to high volume sales has been moved up two years, in combination with the drop in SP thanks to all the Cramer's of Wall Street, have delivered a gift that any short or long term trader simply can not pass up. I took $400,000 I just got from a real estate deal, and bought almost 2,000 shares today. This is a no brainer. When it goes back up to 260, I will have made enough money on today's trade to pay for my wife's Model X. Thank you Cramer and company!!!
P.S. - at this point, unless something dramatic happens, I will keep these shares as well at least until 5/2018. Should be worth at least double by then. By 2020, the shares I bought today alone might have increased in value enough to pay my mortgage off. I love the Bears!
 
Institutions + Elon hold 93M + 29M = 122M shares, out of a total of 132M. That is just 10M for the rest. Wow.
Last reported number of shares short was 29 M. (Source nasdaq.com).

Hmmmm.

I am glad I am not among these 29M, at the mercy of the 122M combined shares held by Elon (who will not sell at any price) and these institutional share holders who (for a good part) are likely in for longer term as a strategic investment.

This is very good point. I am a fan of this metric as well and watching it with interest.

The situation is actually more ominous (for short sellers) that you pointed out. According to the Proxy statement (p.46), as of 12/31/2015 and NASDAQ data:

Outstanding Shares....................................131,424,866
Insiders (Exec. Officers & Directors)............-38,711,940
Institutional Shares.......................................-93,133,331
TMC members and other retail
(without accounting for shares sold short)......-420,405

Yes, my math is correct - it is NEGATIVE 420K shares. The trick is, as I learned about a year ago (thank you, jhm), is that as short sellers sell borrowed shares, the actual shares in circulation exceed outstanding shares by the quantity of shares sold short.

Nevertheless, the situation is explosive. I have to confess, that every time I see gloating self-important proclamation from the shorts and ideological Tesla critics (just to clarify - nothing to do with politics, just goof balls void of any connection with reality, endlessly repeating mindless juxtapositions with big established auto manufacturers), I have this vision of TSLA short squeeze wiping their wealth...

Anyhow, back on topic, this situation seems like a conflict of interest 101 to me. Just who is lending all these shares to the short sellers?? Right - the institutional holders that have big Brokerages - Fidelity and alike. According to the article about Fidelity inner dealings, posted couple of weeks ago there is SEC limit to how many shares a brokerage house allowed to lend for short selling - 70%. This rule is likely designed to put a limit on the ratio of shares in circulation to outstanding shares (1.7 max)

Additionally, brokerages must control their risk from insolvent short sellers. I am just speculating here (may be some professionals in the area can chime in), but the main tools of such risk control would be margin rules for short sellers and the interest charged for the shares borrowed for short selling.

Now to the gist of my thought on this: what prevents a large brokerage house to change margin requirements and interest charged to short sellers? In fact, as above negative 420K shares grow to negative MM of shares it seems to be their fiduciary duty to do so!

And this, IMO, is the huge factor that flies mostly under the radar - the short squeeze can be triggered seemingly independently from any big positive catalyst, just by change in margin requirements and interest is response to the reckless growth of short positions.

I will leave the rest to the imagination of the reader...
 
Last edited:
Isn't there some kind of rule about having to release information material to the share price or something similar - therefore, once they decided to bring production forward, which would inevitably impact on Q3 and Q4, aren't they obliged to release that information.

Surely they cannot simply make promises about the future, when they know them to be untrue?

Guidance is owed to Longs, not shorts, shorts are not shareholders and are owed no fiduciary duty of care whatsoever. Letting them imagine the worst and disappointing them is fair game.

What is weird is promising the Longs performance like building factories before knowing where the money is coming from to do the building.

So it is completely correct and above board to leave guidance unaltered until the means to change plans is no longer guesswork.
 
  • Like
Reactions: Seesaw
Status
Not open for further replies.