Short-Term TSLA Price Movements - 2016

[Value Ev]

Ok, so it's patently obvious to anyone who has an ounce of logic that Elon did not take to twitter, completely unsolicited, to brag about not being able to raise needed cash on favorable terms. Especially at this point in the quarter! If they were having trouble getting necessary financing in q4 for some reason they would keep quiet and keep working, not give up a week into the quarter and announce to the world that they don't need cash! This is simply not how the world works and it's tough for me to overstate how ridiculous this position is. Source - I have direct involvement in helping public companies access the capital markets.

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Why did musk take to twitter?

When you help public companies access the capital markets, what do you advise CEOs about when they should go on twitter to talk about their capital plans?

 

[Intl Professor]

I'm surprised we haven't seen any spooking about the possibility of a rate raise by the Fed. On this score it is pretty definite there will be no raise next month but there's still talk of a raise in December. I don't think even that will happen and if it does it will be a modest 0.25 increase which will rile the markets but not increase the cost of borrowing that much. Support for the dove thesis in December comes from Tim Duy via Mark Thoma:

Jobs Data Keeps Hawks Sidelined

 

[Oil4AsphaultOnly]

Short term: I think we'll drop another $5 by this friday.

Reason:

Observation:
- guessing from the volume, the short-term shorts have already covered on monday (just like last week).
- potentially no _new_ news until the 17th (the analysts seem to want to hold off on any PT raises/changes until after seeing some more details).
- There seems to be an insufficient number of new longs to raise the SP higher on expectations alone.
- max pain is at $203.

So without any new catalyst, the analysts won't report in, and we'll be subject to the whims of the traders and macros. DOW is nearing an ATH, and the feds are ready to raise interest rates. So the only direction is to trend down over the next few days until the product release on the 17th.

my 2-bits.

 

[3Victoria]

Welcome to the island! Enjoy your stay!

Ditto. North or south on the Island?

 

[Off Shore]

Maybe the AI has learned to spread FUD on this thread, perhaps using more than one id!?

Apply Occam's razor. A pile of money will accomplish the same thing.

 

[AudubonB]

This is way off topic but...cuz I'z da Mod...

Spent last night in Nanaimo, this morning in Victoria, this afternoon at *****Butchart******* and tonight in Sidney. Tomorrow to Anacortes.

Who has a Sig Red Model S? A "regular" Red? As were tootling around Victoria at midday today (Monday 10th)? And apologies to the white Model X owner (probably Chinese) heading up the steepest (15%) grade on the Sea-to-Sky y'day (9th) whom we, in our white 1988 FJ62 LandCruiser honked the daylights out of around that curve? It was because that was the first our Tesla-starved eyes had seen for six months......

 

[GoTslaGo]

That's simply wrong. The pre-payment in May 2013 extinguished both parties' rights and obligations under the Loan Agreements. DOE and Tesla would have to negotiate new agreements. Take a look at the financial covenants that Tesla was facing before the convertible note offering was used to prepay the DOE loans. Tesla would currently have an even worse time complying with those kinds of covenants. EX-10.37F

Wow! Thanks for posting. Really puts those convertible notes in perspective. No wonder they wanted to pay the DOE loan off so quickly.

 

[3Victoria]

This is way off topic but...since I'z da Mod...

... Who has a Sig Red Model S? A "regular" Red? And were tootling around Victoria at midday today (Monday 10th)?

Couple Sig Reds in Victoria ... D Biberdorf has one and another guy who gets the beta sw. They are gorgeous cars. Happy Thanksgiving today in Canada.

 

[esk8mw]

Why did musk take to twitter?

When you help public companies access the capital markets, what do you advise CEOs about when they should go on twitter to talk about their capital plans?

Better question is why not take to Twitter? It's an effective medium and there's certainly nothing wrong with what he said. I don't have any heavy Twitter using clients but I would have greenlighted Elon's tweet in a heartbeat.

PS - Next time you get banned and create a new account here, you should stop using the word "value" in your handle. Makes it really easy to spot you. The new concern trolling angle isn't very convincing either. Hope this helps.

 

[FredTMC]

Stop posting every two minutes. Take a breath.

Short term: I think we'll drop another $5 by this friday.

Reason:

Observation:
- guessing from the volume, the short-term shorts have already covered on monday (just like last week).
- potentially no _new_ news until the 17th (the analysts seem to want to hold off on any PT raises/changes until after seeing some more details).
- There seems to be an insufficient number of new longs to raise the SP higher on expectations alone.
- max pain is at $203.

So without any new catalyst, the analysts won't report in, and we'll be subject to the whims of the traders and macros. DOW is nearing an ATH, and the feds are ready to raise interest rates. So the only direction is to trend down over the next few days until the product release on the 17th.

my 2-bits.

I thinks there are shorts that'll think twice about opening a position right before Monday's announcement

Likewise, there's bound to be longs that will open /add positions...

 

[Ameliorate]

Ditto. North or south on the Island?

In Victoria, as I suspect you are!

Love seeing the Tesla's around, saw my first X a couple weeks ago, sadly I'm not an owner...yet...
(also a BYD bus)

Sorry for the OT! Hoping for HUD and AP2 hardware on Monday

 

[SunCatcher]

All this talk about Model 3 production dates; will it be on time? Will it be late? "Tesla is always late." Well consider this; the Model 3 has no falcon wing doors. It is not a luxury saloon. It has no complexities that would cause it to be late, AND… it rides on the heels of the Model S and the Model X, whose complexities have been worked through and whose myriad of problems have been solved. So. The Model 3 will be Tesla's easiest car to build. Riding on the backs of its predecessors, the Model 3 will be simply, a matter of getting on with it.

For Tesla, things do not get harder with time. They get easier. The technology has been proven. It's time to capitalize from it.

Oh boy. Here we go.

 

[sub]

People's, not only is it a waste of time to read endless posts from regulars shadow boxing with these trolls, but these trolls are the ones puttting the money into our and Tesla's pockets. Your costing yourself time and/or money debating them.

Stop trying to talk sense into them, if they had any they wouldn't be trolling this forum, just nod politely and slowly back out of the room.

I no longer try to convince people they don't have a magic friend in the sky either, i don't live in their reality.

 

[GoTslaGo]

"Aug 7th 2016, A machine intelligence system, called Emma AI, is starting a fund that hopes to outsmart the humans and computers that make a living trading stocks."

In case you haven't heard of this news, here is the summary: someone built a program/AI system, tested for 6 months before August. It traded a handful of stocks and gained 30%. That's 70% annualized. After this initial test, they decided to focus on trading TSLA, GSK, and U.S. Treasury bonds. I suspect the program did better than 30% on these in the first 6 months.

If you are trading, I think it's important to understand other traders (including this AI) so you don't rank below average. Actually, because top 10% traders make almost all the TRADING profit, if you rank below top 10%, you probably will lose money, you may lose fast or slow, depends on how you trade.

Another group of traders are normally identified as shorts, but they actually trade. They first build Put position, then drive down the stock then they either cover or switch to long near the bottom, then repeat. I know one strategy would work for them: keep adding near term (8~12 weeks) Calls while driving down the stock. When it has fell enough, small long traders have all given up, the big shorts add large amount of near term Calls and start to cover, and switch to longs. This rally phase can last 1~3 months. They make a lot of money on the Calls and on the shares purchased near the bottom. Then they repeat. I personally don't know anyone who is doing this, but this seems obvious when I study stocks' price action.

I know lots of people on this board are intelligent longs who hold for the next 10 years. But for those who actively trade (such as buying and expecting the stock to go up by certain date then sell), first understand this is trading, it has nothing to do with investment. Second, make sure you are very familiar with this game before you deploy large amount of fund. Inexperienced traders can lose a lot of money in a very short time. The top traders do well because they eat sucky traders' lunch. Put everything aside, they have a lot of experience and knowledge, and they hire PR companies to help move the stock. Jesse Livermore (the famous trader in early 19th century) used newspaper to influence stock price with success.

Trading has trading rules. Here are my rules:

1. Make sure I understand the value of the company, in case the swing turns wild for extended period, I am willing to treat it as a long term investment and hold for years.

2. Make sure I always have 10% cash reserve and never use it. It's intended for the worst case, but always assume the worst is yet to come. For those who know for sure they have additional cash/income to deal with the worst case or margin calls, I guess the 10% rule doesn't apply. They probably can even use margin.

3. Every stock is manipulated. Although some people say the market is rational and efficient, I don't agree with it. I have seen a stock drop to below it's cash holding, then gain 1000 fold in the next 10 years, it's not even a bubble or short squeeze, it's driven by real earnings. If the market is that efficient, it shouldn't have dropped to below cash in the first place. Another example, in 2013, APPL dropped to cash + 2 years' earnings. That was irrational considering Apple has so many leading products, I essentially get the whole business for free if I bought it and sit for 2~3 years. The manipulation on high growth with debt companies is much more intense. For this reason, I always assume the potential range of swing is much larger than most people assumed.

4. Build the trading position in steps. Don't get all in when I think it bottomed. The first batch is the smallest, then add more after a sizable drop from the first batch, then the third, fourth batch. The entry price of each batch is sufficiently stepped. This is to prevent building all positions within a 5% drop.

5. Take profit in steps if the stock rallies as planned, this is a. to raise cash; b. to maximize profit in case the rally has legs.

6. For trading, the technical charts and indicators are more reliable than fundamentals. If I study really hard, I might successfully predict the company's sales will go up 20% next quarter, so what? on that news, the stock may jump 20% or drop 20% depends on the mood.

7. Options are wonderful if I use it correctly. I found generally there are 4 ways to take the advantage:
a. When a stock rallied to the top band, I can sell covered Calls, instead of selling my position.
b. When I see an attractive entry point, I can sell covered Puts to reduce my cost.
c. When technical indicators tell me a rally or drop is imminent, I can use small amount of money to "gamble" - when possibility to be right X potential gain >>> possibility to be wrong X potential loss.
d. Buy bullish Call spread, or buy bearish Put spread.
e. I found normal purchase of Options based on popular market opinion usually leads to disappointment.
f. This is very important: NEVER sell covered Calls near rock bottom. If you do, the guy who bought your Calls will gain 10~20 fold, you lose your position without upside.

I am mostly a long term buy and hold investor. I think Tesla is highly likely to grow into a giant. However, if you decide to trade, I think it's very helpful to have a set of sound trading rules. More importantly, have the discipline to follow the rules. Otherwise it's very easy to fall into one of the numerous traps. I hope that every Tesla supporter does well.

Awesome! Thanks!

Hope you don't mind if I link @Novice here as well. His questions are often like mine when it comes to the trading.

 

[schonelucht]

Better question is why not take to Twitter? It's an effective medium and there's certainly nothing wrong with what he said. I don't have any heavy Twitter using clients but I would have greenlighted Elon's tweet in a heartbeat.

That's kind of a cop out answer given how certain you were earlier that there was a definite reason for Elon to take to twitter to specifically talk about the cash needs of his company :

Ok, so it's patently obvious to anyone who has an ounce of logic that Elon did not take to twitter, completely unsolicited, to brag about not being able to raise needed cash on favorable terms.

So, yes, I find it an interesting topic to speculate about why he did what he did. It wasn't idle late night rumination on the world being a self-conscious AI. You (and I!) agree some event solicited him to make his remarks. One of your earlier suggestions was that the financials were good enough that they good self-finance. The problem with that explanation is that I haven't seen one single estimate of their financials that even comes close to make that realistically possible. @vgrinshpun made a play on a single one contract worth of $4B in prepaid Tesla Energy products. But that's absolutely far out left field, the single utility name he mentioned in that context was quickly dismissed. And that's really the only one that actually tried to find some way to make the self-financing idea work. That leaves your worst explanation for now : they are delaying cash raise because the terms aren't favourable. But that brings us to the second point :

On the July 1st date. It was being discussed in the context of when must Tesla start building out and spending cash. Even with it being internal, it's still a real goal. Sure,Tesla could already today start eating into that buffer and say that cash intensive projects don't need meet the July 1st goal but let's say Sep 1st. But it would still be a complete repudiation of their original meaning of that internal deadline : that everyone is supposed to be ready and that the buffer is there for the inevitable small, unplanned, hiccups. Purposefully delaying cap ex today however is not a small unplanned hiccup. On the contrary.

BTW. Should, despite all of the above,Tesla manage to self-fund the model 3, the tsunami of hurt will be big time for the shorts. And I personally will feel that everyone who holds their shares into that prediction has absolutely earned every single penny they make from that transaction. It's a bold gamble that deserves a bold pay out. Just not one that I am willing to make.

 

[ev-enthusiast]

Up a bit during early trading in Germany.

 

[Novice]

Awesome! Thanks!

Hope you don't mind if I link @Novice here as well. His questions are often like mine when it comes to the trading.

That's a very shrewd observation . I'm always interested in chart analysis and technicals. Started trading tesla only recently ( I'm a hardcore long ) but made the mistake of buying too high at 225 two months back. Was stuck ever since. The other half of my portfolio consist of blue chip tech stocks which are less volatile than tesla . Just wondering when can the SP ever be restored to its former glory. From chart analysis it appears it should have turned around but we're still hovering at the 200s which is quite discouraging

 

[Nate the Great]

The announcement of the merger has caused an wet blanket affect on the SP. Once the merger goes through "I hope" it returns to its former glory.

 

[Xpert]

I thinks there are shorts that'll think twice about opening a position right before Monday's announcement

Likewise, there's bound to be longs that will open /add positions...

I like to think the upcoming 3 events this month put a bottom to short term the SP.
With low volumes we might end up around max pain this week ($202.5) then move up next week in anticipation of the AP 2.0 (?) unveil, and up again the week after that due to anticipation of ER/solar roof. Range bound $200 - $220 is my wild guess by end of month.

 

[vgrinshpun]

Tesla should raise cash soon, despite Musk's tweets, analyst says

Question for those versed in corporate finance - is borrowing using asset backed line of credit considered to be corporate debt?