Short-Term TSLA Price Movements - 2016

[Big-T]

Hey guys, sorry for the noob question - I don't spend much time here. I'm no day trader but do buy stock occasionally. I sold my few shares after the recent run up. Now that the price is back down around $200-ish I thought it might be good to come back in... It feels wrong to short the stock as I buy for the long term and I feel tesla stock will definitely rise once the model 3 starts production.


BUT I'm wondering what news might be forecast to make it go up beforehand? What I see in the next 18-24 moths is a capital raise, which would dilute the shares and likely send the price down a bit right? Also more cash burn for all of the extra ramp that has to happen with the accelerated model 3 timeline (more machines, more workers, more real estate). Isn't there a real risk they'll have to take away from existing S&X production at some point next year to crank out the maximum amount of 3's? Won't all this be a drag on the bottom line in the short term? Meaning isn't the stock poised to go lower before it goes higher?

 

[The Blue Owl]

The X will be fine. Although I doubt there is consumer demand for 80-90K S/X without china. The X will likely have a surge in demand with the car in showrooms and buyer confidence in quality increases. But I do agree that the current short delivery window should be concern for investors.

I see the shorter delivery window as indicative of a much improved production line, which is a big positive.

 

[electracity]

..

BUT I'm wondering what news might be forecast to make it go up beforehand? What I see in the next 18-24 moths is a capital raise, which would dilute the shares and likely send the price down a bit right? Also more cash burn for all of the extra ramp that has to happen with the accelerated model 3 timeline (more machines, more workers, more real estate). Isn't there a real risk they'll have to take away from existing S&X production at some point next year to crank out the maximum amount of 3's? Won't all this be a drag on the bottom line in the short term? Meaning isn't the stock poised to go lower before it goes higher?

1) Robust S/X consumer demand
2) Uber-like black car service in major cities (hopefully via a deal with someone like Lyft)
3) A nicer than expected Tesla Energy announcement. I'm sure Musk intends to circle back to Tesla Energy during the pre-M3 lull.

 

[Johan]

As far as I understand it, new GAAP rules go into effect on Jan 1 2017 which would allow Tesla to put an end to under-declaring GAAP revenues and profits due to the current GAAP lease accounting.

The current rules cannot distinguish between a normal real lease where the seller owns the car and the customer has not yet agreed to buy the car at the end of the lease term - and has only just started making lease payments. This is how GAAP treats aTesla sale that is 100% bought and paid for by the customer but when maybe the customer could sell it back three years later due to the Residual Value Guarantee. Which is obviously stupid (unless you are a TSLA bear in which case this would seem like common sense). Anyway the FASB are not deranged Tesla shorts so they have fixed this error in the revised rules that go into effect next year.

All Tesla has to do under the new rules (as I understand it) is to log an asset value of the car to balance out the RVG liability so it no longer has to pretend it is buying its own cars at a loss instead of selling them at a profit every time it sells a car with an RVG.

I think you're correct on the lease accounting and that they've been very (overly) conservative in the way they account for it under GAAP. A change in the way they account for it could absolutely be an important factor to tip them over the edge to GAAP profitability.

Also: my post that you quoted was in reply to mr. Irish Juggs and the subject was really why the compliance department of the firm where he works allows employees to invest in stock but not options.

 

[Johan]

You are talking as if short selling is some kind of crime. Defrauding shareholders by hiding basic material information from them, acting as a conman while company is near bankruptcy and concocting new terms for accounting to create the illusion of FCF+ are much bigger crimes. When you and other uber bulls with hallucinations will start writing "Disclosure: long TSLA on blind faith", I will add my short selling info to my signature.

Yes, I have reminded Tesla owners on lemon law to return their expensive lemons back to Tesla, and I'm proud of that. And I have 0 sympathy for those Teslemmings who want to genuflect to the almighty and willingly self-inflict pain on themselves. God help their souls.

PS: If it makes you feel better, YES, I have shorted TSLA successfully and made significant profits. Someday, I might just change my alias to Dr. ScamBuster to be more appropriate.

Please see my signature. Your move.

 

[FredTMC]

I want to respond to a picture posted on Twitter yesterday of regular practice for Tesla that surprised some viewers:

I'd like to clarify that Tesla has always stored Model X while waiting for additional parts, and this gets counted as collateral in their Asset Based Loan (ABL). Months ago, there were lots of sightings of lots and lots of Model X stored at many Tesla stores by me and others, similar to the recent circulating picture, just more spread out back then. Tesla keeps the factory busy, ships the product (Model X) close to delivery, stores those parked in many Tesla stores' back parking lots or other more organized locations, and then get the necessary parts to install later, for those few vehicles that they can do that. This is old hat for Tesla while they are still manufacturing the cars. They have a very very fast stamper and paint shop, so they are front-end loaded, and their manufacturing line is mostly very fast and reliable. This just makes sense. Meanwhile, they keep getting better at getting the whole thing done in the first shot. But it only takes a few % of only one week's production during first year production to fill a parking lot with Model X's mostly complete waiting for 1 part. Once that 1 part is available, they can put it in. Tesla is OK with this at this point because of the ABL. It keeps everything moving at capacity (including supply, manufacturing, and delivery channels).

This reminds me of the many tens of thousands of ICE cars sitting around in shipping yards that I've seen when I worked as a temp in some port cities (Portland comes to mind).

I'm obviously looking forward to the day almost all Tesla Model X's and Model S's get delivered within a week or two of ordering, so people can basically get a new car as soon as their old ICE car kicks the bucket. Lots of people want Tesla's, and this would help out tremendously. Sub-week deliveries would be awesome! Tesla mostly has the capacity. Once those last few items are smoothed out, this would really make things nice. I see lots of people in California driving new vehicles that cost as much as a Tesla that are ICE's, and I have to think a good % of those would have gotten a Tesla if they knew they could be sitting in one pretty quickly. Having to wait for a Tesla once ordered is a well known issue, and once word gets out that you can get one quickly, more people would pile on to buy one.

Link? Tia

 

[nienco2]

The original "concern" posted by nienco2 was not a genuine concern but FUD.

Nienco2 -- like his friend Dr. Valueseeker -- is a short seller. Short-Term TSLA Price Movements - 2015 .

Sorry but couldn't resist pointing out the Short Term Price movement 3 to 4 months after my post in October you reference. Thanks

 

[JRP3]

Someday, I might just change my alias to Dr. ScamBuster to be more appropriate.

I can think of a number of even more appropriate aliases for you to choose from....

 

[FluxCap]

I smell fear and salivating shorts in these waters. Stalking some more common.

 

[tanner]

Does anyone here have success waiting until the SP has settled a bit toward the end of the day + only look for moves in the .30-.60 range?

 

[electracity]

I see the shorter delivery window as indicative of a much improved production line, which is a big positive.

Last year I expected X production for this year to be sold out. I'm confused what happened to all the reservations.

 

[The Blue Owl]

Last year I expected X production for this year to be sold out. I'm confused what happened to all the reservations.

Right. That darned demand dropping again, surely.

 

[madodel]

Telling lies using innuendo is not a felony either ... Just sayin'

No, but I'm sure it is profitable for all the shills who are paid to spread those lies.

 

[Irishjugg]

I think you're correct on the lease accounting and that they've been very (overly) conservative in the way they account for it under GAAP. A change in the way they account for it could absolutely be an important factor to tip them over the edge to GAAP profitability.

Also: my post that you quoted was in reply to mr. Irish Juggs and the subject was really why the compliance department of the firm where he works allows employees to invest in stock but not options.

Yeah possibly.

We also have an absurdly overlong holding period rule to deal with too. Fairly annoying.

 

[Sancho]

Predicting catalysts and short term movements is a fool's errand.

The longer term is much easier to gauge. It has nothing to do with X ramp, X demand, near term FCF, etc. Even the capital raise specifics only marginally impact the longer term.

There are just 3 factors for the intermediate term SP:

1). Demand for the Model 3

2). TM capability of meeting M3 demand at the projected timetable.

3). Margin of the M3 at the full run rate.

We already know demand. As the year progresses we will get various data points confirming the real timetable, as well as the likely margins. As confidence in these two grows, the SP will rise. But not in a straight line. Invest accordingly.

 

[Ulmo]

Link? Tia

I'm seeing it at Seeking Alpha with the repeated post of the picture of a garage full of Tesla's.

 

[Lump]

I'm seeing it at Seeking Alpha with the repeated post of the picture of a garage full of Tesla's.

Started here Crashed a Tesla Meet • /r/teslamotors

 

[Ulmo]

Started here Crashed a Tesla Meet • /r/teslamotors

Yes, that's it. And the responses in that thread explain the same thing I explained: they sit there waiting for parts. It's not a demand problem. And yet, ""SEEKING ALPHA"" claims it's a demand problem. Complete FUD.

 

[Jayjs20]

Hmm, how high will it go today, nobody knows yet.

 

[vgrinshpun]

The video of the OCE Discovery Conference's Key Note address by JB Straubel is up:

Tesla CTO JB Straubel talks Tesla Energy and working with Elon Musk [Video]