Short-Term TSLA Price Movements - 2016

[Hogfighter]

"No one is claiming Tesla is a huge car company"

and yet it currently trades at a valuation higher than other large auto companies and comparable to some of the largest.

I enjoy the valuation discussion, because it is based on future earnings.

Let's use Porsche as an example. They sold 225,000 vehicles last year, with good gross margins, and a growth rate of 19%.

What would Porsche's market cap be if:

- They were growing at 70% instead of 19%

- They figured out a way to make their cars get 80 mpg AND gave away free gas when their customers went on a trip

- They figured out a way to make their highest performance cars quicker, more affordable AND far safer

- They found a way to make their most expensive part far, far cheaper (batteries)

- They designed their cars in such a way so that they didn't need regular maintenance anymore

- In the process of doing their research, they found massive demand for a product that they were already producing (TE)

Me thinks that the world would drive that stock up to ludicrous levels.

 

[Seesaw]

All we need is a decent ER and the stupid $2.6 billion purchase of SolarCity to fall through and it will be happy days

 

[Lessmog]

I enjoy the valuation discussion, because it is based on future earnings.

Let's use Porsche as an example. They sold 225,000 vehicles last year, with good gross margins, and a growth rate of 19%.

What would Porsche's market cap be if:

- They were growing at 70% instead of 19%

- They figured out a way to make their cars get 80 mpg AND gave away free gas when their customers went on a trip

- They figured out a way to make their highest performance cars quicker, more affordable AND far safer

- They found a way to make their most expensive part far, far cheaper (batteries)

- They designed their cars in such a way so that they didn't need regular maintenance anymore

- In the process of doing their research, they found massive demand for a product that they were already producing (TE)

Me thinks that the world would drive that stock up to ludicrous levels.

Aand then, someone would find a mysterious boat anchor tied to every car they made, pointy-shaped like, i dunno, vw?

 

[Lessmog]

All we need is a decent ER and the stupid $2.6 billion purchase of SolarCity to fall through and it will be happy days

Seems to me that analysis is flawed, contradictory. If that's how you really feel, maybe just take profit and be happy?

 

[Irishjugg]

"However when you put it correctly, which is to say 25% more cars than expected"

you've just nailed it... 5k cars not only sounds small... IT IS SMALL... 5k cars as I pointed out yesterday is the equivalent of 4 hours of GM's production...

but when you say "They Sold 25% than Expected!!!"... now there's a headline... right?... as long as you don't compare Tesla to any other auto manufacturer... then Tesla is looking phenomenal!

It's been pointed out to you many times, but Tesla shouldn't be compared to any established automaker, obviously, as they are a start up automaker. In a start up, growth and profitability are what matter, not absolute number of units, so the comparison you make is completely meaningless. The wording I used is what actually matters at this stage of Tesla's business lifecycle. It's also why your call hedge will pay off so well over the next few days ago the expense of your short position.

For the record, as also pointed out to you many times (though you appear to disagree), Tesla shouldn't be compared to car companies for valuation since Tesla is much more than a car company in product line, mission statement, and goals. It's more comparable to a GE like company that makes many machines in several industries, however with growth as a goal instead of dividend payment (which should lead to a higher multiple if Tesla reaches a mature state).

 

[Jonathan Hewitt]

I think the biggest thing to take out of all of this is that Trip Chowdry's "Most optimistic estimate" of 22,000 deliveries ended up being conservative.

 

[luca]

I enjoy the valuation discussion, because it is based on future earnings.

Let's use Porsche as an example. They sold 225,000 vehicles last year, with good gross margins, and a growth rate of 19%.

What would Porsche's market cap be if:

- They were growing at 70% instead of 19%

- They figured out a way to make their cars get 80 mpg AND gave away free gas when their customers went on a trip

- They figured out a way to make their highest performance cars quicker, more affordable AND far safer

- They found a way to make their most expensive part far, far cheaper (batteries)

- They designed their cars in such a way so that they didn't need regular maintenance anymore

- In the process of doing their research, they found massive demand for a product that they were already producing (TE)

Me thinks that the world would drive that stock up to ludicrous levels.

porsche's 19% is YoY

tesla's 70% is QoQ

tesla's YoY is 111%

 

[FluxCap]

If you look at the previous significant moves to the upside, they often took 3+ days. NASDAQ isn't helping us here either, but @FluxCap is right, there should be upgrades/notes from analysts and hopefully we will end the week much higher.

I was hoping for a pop to the low 220's testing that resistance before settling in the teens today to then move higher, but the 215 resistance was too strong to blow by.

Indeed. Often, the vast majority of the market is slower to process Tesla news than we are here. I wouldn't call a top here so quickly.

 

[stealthology]

Disagree. Revised analyst price targets should hit tomorrow before opening bell, and with a slightly green NASDAQ we should see a run into the 220's with volume. Articles will continue to reinforce positive upside surprise is likely in Q3, and buyers will magnify this effect as fear of missing out on gains combines with continued covering.

Hopefully. I beleieve the only analyst to come out has been Big Ben @ Baird, I think we hear enough from him.

After some digging, here are the analysts who made comments during delivery # week in Q2 (7/4 - 7/8). Meh, most are TSLA bears I believe. It wasn't the best quarter for Tesla though.

Q2:

• Deutsche Bank - 1 day after
• CLSA - 2 days after (do they count?)
• Barclays - 3 days after
• Pac Crest - 3 days after
• RBC - 5 days after

 

[SBenson]

I don't think analyst price target upgrades are coming.

SCTY acquisition and pending capital raise making analysts hesitant.

For example, Adam Jonas came out with note this morning and here's the last paragraph:

"A welcome positive after a challenging summer. But we’re not convinced these results will make the skeptics give up the bear case view that the Tesla share count will continue to rise faster than the Tesla share price. Our $245 price target offers 20% upside to fair value. Given the combination of execution risk, SCTY deal risk and financing risk, we believe investors should be offered a higher reward as compensation. We are convinced Tesla is well positioned for what the auto/transportation industry is rapidly evolving into (shared, autonomous and electric mobility). It is the financing of the plan and the impact on the firm’s cost of capital following the announced SCTY transaction that give us pause."

There is also this little wet blanket issue of discounting cars to make the number. So until gross margins etc come out (to hopefully prove otherwise), I see the excitement to be somewhat muted.

 

[FluxCap]

Hopefully. I beleieve the only analyst to come out has been Big Ben @ Baird, I think we hear enough from him.

After some digging, here are the analysts who made comments during delivery # week in Q2 (7/4 - 7/8). Meh, most are TSLA bears I believe. It wasn't the best quarter for Tesla though.

Q2:

• Deutsche Bank - 1 day after
• CLSA - 2 days after (do they count?)
• Barclays - 3 days after
• Pac Crest - 3 days after
• RBC - 5 days after

You sir are hired! Nice research.

 

[Papafox]

So, we busted though 215 earlier today, where the 50DMA and 200DMA lie. TSLA pretty much stabilized at 213 but now the stock has made a play for 214. My read? People with substantial short holdings have put in an effort to "top" the climb today at a location that is below 215. The 213 level looked good for a while, but now they're having trouble holding it. I suspect shorts will try to hold the line at 214 now, then make a play to bring it back to 213 if they can. If TSLA busts through 215 and the 50DMA and 200DMA, then it will go higher, and there's a chance shorts will start to bail. So far, the price rise has mostly been longs buying in IMO. If the shorts start to bail, we will see 220s, IMO.

Consider the $25 price Kallo targeted for SCTY. Using the .11 exchange rate, that equates to $227 TSLA, which is a resistance level vgrinshpun mentioned earlier today. I think Kallo is likely right. Once the SCTY merger and the capital raise are done, TSLA can climb above the $227 level.

 

[SBenson]

Disagree. Revised analyst price targets should hit tomorrow before opening bell, and with a slightly green NASDAQ we should see a run into the 220's with volume. Articles will continue to reinforce positive upside surprise is likely in Q3, and buyers will magnify this effect as fear of missing out on gains combines with continued covering.

Is 220 exciting? I feel like 220 or even 240 to be just very luke warm... This is supposed to be the best quarter ever (and for a while until model-3 rolls out in volume), if we don't creep into 280s now. Then when? maybe late 2017 (highly unlikely) or more like mid 2018...

I'm rather quite very underwhelmed. The price action today is great but we are starting off from a much lower base.

For some context, TSLA's latest secondary was done at 215 and EVERYONE bashed that it was a poor price to raise capital at. We are still under it or barely around it.

No, 220 is not at all exciting.

 

[ggies07]

For the record, as also pointed out to you many times (though you appear to disagree), Tesla shouldn't be compared to car companies for valuation since Tesla is much more than a car company in product line, mission statement, and goals. It's more comparable to a GE like company that makes many machines in several industries, however with growth as a goal instead of dividend payment (which should lead to a higher multiple if Tesla reaches a mature state).

I like to view Tesla like my grandparent's generation (who were born in the 1920s) viewed the oil industry.

myusername - if you have read about what's happening with the energy industry and you see the changes that are happening, TSLA is the stock to be in for the next 10-20 years. Tesla is about to become more than a car company and is on the right path we are headed for. So, forget about GM and anything that isn't going towards EVs, battery storage, solar/wind.

 

[tander]

I think the biggest thing to take out of all of this is that Trip Chowdry's "Most optimistic estimate" of 22,000 deliveries ended up being conservative.

That's a really good point. I think Kallo said more than 20,000 was really good. Guessing that warrants at least a few upgrades.

 

[aznt1217]

There is also this little wet blanket issue of discounting cars to make the number. So until gross margins etc come out (to hopefully prove otherwise), I see the excitement to be somewhat muted.

They'll remain hesitant till the Solar Roof product is revealed

 

[Papafox]

Connecting the dots . . .
When Elon said that 3Q16 might be Tesla's best quarter yet, there was ambiguity about whether he was referring to delivery numbers or financials. From the Q3 delivery numbers, we know now that he was talking about financials, because there was no question that the previous delivery numbers would be annihilated. So, if he felt that Q3 financials might be best ever, would he put the kibosh on discounting a week before the end of the quarter if he was unsure whether Telsa would reach profitabllity in Q3? Would he remove the non-gaap accounting if TSLA was going to be non-gaap profitable in Q3 but not gaap profitable in Q3? Would there have been 5500 vehicles in transit at end of Q3 with a note in delivery numbers release that vehicles aren't counted as sold until all paperwork is completed perfectly? To each of these questions, I see the answer as "no". Thus, I am assuming Telsa has profitability in Q3.

So, when do you let the cat out of the bag if Tesla is profitable in Q3? It's been done on delivery numbers day back in 2013. It could be done any day now via a tweet from Elon that basically says "Preliminary computations suggest that Tesla has achieved profitability in Q3", or the numbers can be released at the Q3 ER. Each has their advantages and tells us something about both the merger vote possibilities and the cap raise possibilities. If the merger vote is scheduled before the 3Q ER and Elon thinks he has the vote in the bag, then he might hold off on the profitability info until the Q3 ER. If Q3 was not quite profitable, then he would definitely not say anything until after the SCTY vote, but I don't think this is the case. The advantage of releasing the profitability info after the vote is that if TSLA SP sags after the vote, which is entirely possible, revealing Q3 profitability will bring it back rather quickly and help remove criticism of the merger.

For clues about profitability, look at timing of the vote and cap raise. If both take place after the 3Q16 ER, then I think that's a great sign that profitability is there. If the vote is scheduled before the Q3 ER, then there's the likelihood of Elon letting Q3 profitability out of the bag through a tweet ahead of the vote if he feels there's any question of it passing. We can indeed get clues about profitability, likelihood of SCTY merger success, and likelihood of capital raise success by using the scheduling of these events to read the tea leaves.

 

[dha]

Speaking of Porsche....I thought it would be worth pointing out a great milestone.

Porsche North America announced September sales today: News / Recent Press Releases

Q3 is now the first quarter in history where Tesla has outsold Porsche in North America (15,425 vs. 13,538, based on InsideEVs figures for Tesla)

 

[Phil Seastrand]

In this CNBC interview with James Albertine he discusses that "luxury sales broadly are weakening" and says that Tesla is not impervious to this downturn. The question is if this downturn for Audi, BMW, etc., is caused by Tesla or general market weakening.

Can Tesla continue to deliver?

 

[esk8mw]

Connecting the dots . . .
When Elon said that 3Q16 might be Tesla's best quarter yet, there was ambiguity about whether he was referring to delivery numbers or financials. From the Q3 delivery numbers, we know now that he was talking about financials, because there was no question that the previous delivery numbers would be annihilated. So, if he felt that Q3 financials might be best ever, would he put the kibosh on discounting a week before the end of the quarter if he was unsure whether Telsa would reach profitabllity in Q3? Would he remove the non-gaap accounting if TSLA was going to be non-gaap profitable in Q3 but not gaap profitable in Q3? Would there have been 5500 vehicles in transit at end of Q3 with a note in delivery numbers release that vehicles aren't counted as sold until all paperwork is completed perfectly? To each of these questions, I see the answer as "no". Thus, I am assuming Telsa has profitability in Q3.

So, when do you let the cat out of the bag if Tesla is profitable in Q3? It's been done on delivery numbers day back in 2013. It could be done any day now via a tweet from Elon that basically says "Preliminary computations suggest that Tesla has achieved profitability in Q3", or the numbers can be released at the Q3 ER. Each has their advantages and tells us something about both the merger vote possibilities and the cap raise possibilities. If the merger vote is scheduled before the 3Q ER and Elon thinks he has the vote in the bag, then he might hold off on the profitability info until the Q3 ER. If Q3 was not quite profitable, then he would definitely not say anything until after the SCTY vote, but I don't think this is the case. The advantage of releasing the profitability info after the vote is that if TSLA SP sags after the vote, which is entirely possible, revealing Q3 profitability will bring it back rather quickly and help remove criticism of the merger.

For clues about profitability, look at timing of the vote and cap raise. If both take place after the 3Q16 ER, then I think that's a great sign that profitability is there. If the vote is scheduled before the Q3 ER, then there's the likelihood of Elon letting Q3 profitability out of the bag through a tweet ahead of the vote if he feels there's any question of it passing. We can indeed get clues about profitability, likelihood of SCTY merger success, and likelihood of capital raise success by using the scheduling of these events to read the tea leaves.

Someone needs to ask Elon via Twitter for the Shortsville weather forecast.