Short-Term TSLA Price Movements - 2016

[NOLA_Mike]

I was considering selling a large chunk of my TSLA today and buying SCTY with it.

Maybe a small chunk? I am "arbitraged" a little bit with SCTY.

But what do I know - I feel like a deer in headlights right now as far as direction goes.

 

[ev-enthusiast]

I strongly recommend to read the following article about BMW strategy for the next couple of years.

New CEO Krüger refuses to see and accept the obvious change. Absolutely stunning.

Tesla is already hurting BMW 7 and 6 series sales (Model S), for X5 and X3 the hurt is on it's way (first Model X arriving in Europe and Asia) and for 3 and 5 series hurt is coming very soon (first Model 3 to be delivered in a bit more than half a year!).

BMW, keep your eyes wide shut, keep ignoring the new reality and feel the pain.

The article is from one of Germany's most renowned newspapers, Süddeutsche Zeitung. They are situated in Munich as well as BMW thus they are a very good source of information:
https://translate.googleusercontent...211085&usg=ALkJrhh-_9_tegYHrfXTDUFuCHffJgnXGQ

 

[Intl Professor]

Not to change the subject, but Randy Carlson has another great article and a new thought for us from SA.

http://seekingalpha.com/article/401...6ot:1fab2b46b1a0bd0a36aeca4257f57fb8&uprof=46

He cleverly chose a negative sounding topic.

 

[nienco2]

The Big Short, although in that case the price of the underlying assets were (allegedly) artificially propped up to protect against larger losses on the derivatives instead of held down. That worked great. Until it didn't and the mortgage market came crashing down and the parties holding the derivatives got crushed.

See any parallel? Over the summer everyone marveled at the stock price holding up in the face of a lot of bad news, GS analyst bumps the price target ahead of capital raise, all the while GS is dumping their shares. Is it just possible we've seen this movie before?

 

[racer26]

Do you have some source for this?

On some further research, I'm not completely correct.

If load experiences a downward step change, (ie. 100MW down to 80MW because everyone's air conditioner just kicked off), the spinning generators will momentarily speed up due to the reduced resistance to turning. This results in an increase in the line frequency (which is also bad) and the system automatically dials it back by reducing generation power. This is how the 60Hz line frequency (in North America, 50Hz most other places) is maintained.

Solar generation doesn't work in quite the same way. Solar is generated as DC, and connected to the grid through solid state inverters which run at 60Hz/50Hz all the time. With increasing solar generation being installed, and the way its connected to the grid (generate @ 120V -> street level transformer up to 400-600V -> substation up to ~40kV -> substation up to 600kV high-tension transmission towers), and the distributed generation not being under the power company's direct control, this problem is becoming more difficult to manage than it used to be, and so in some cases they're resorting to resistive dissipation as I described to keep the grid in balance.

As solar penetration continues to grow, this problem will continue to get worse - we'll be generating way too much power at high noon, and not nearly enough in the night. Storage is the obvious solution.

 

[AlMc]

I think discussing the shorts is not particularly effective.

Clearly, there is opportunistic short selling, often at the right technical points to try to influence the stock price. It's pretty clear if you watch the trading action.

However, the big problem isn't the shorts... it's the longs. They aren't buying in enough quantity, and worse, they are selling.

On top of that, I don't think Mr. Musk has been clear enough. Yes, he has had a slew of good news and he keeps showing us great things that he and his companies are trying to accomplish. However, they still aren't clear enough to signal to the markets that things really are ok. For example, some sort of better idea of the ramp of the Gigafactory and what that means for the financials in 2017 would go a very long way I suspect. A much clearer understanding of the Model 3 production ramp costs. Yes, they said they don't need additional capital, maybe, except to de-risk. However, the market completely discounted that statement. While many people want to hear from Musk, I actually want to hear more from the CFO, Jason Wheeler. I personally don't want Musk making any of the statements with respect to the financials, I want Mr. Wheeler as the CFO to lay out the fundamentals of how the company is getting from where we are today to a successful Model 3 launch and a Model 3 2018 500,000 build plan. I love to hear from Musk about the vision of the future, I want to hear from the CFO how that is going to happen with the financials. Clearly the market does not believe their capex and opex statements and wonders just how engineered the Q3 quarter was... and therefore information about Q4 is a very big deal.

And I want to hear more about exactly what they will be doing with SolarCity. What are the range of capex possibilities? How will they be changing around that company to assuage the fears of the long investors? The Solarcity acquisition has a lot of fear associated with it, and hopefully tonight they make it clearer to cut down on the fear.

.

^^^^This^^^^ The short discussion, while interesting, is not the heart of the problem.

 

[Jonathan Hewitt]

Apparently WS is moving TSLA lower now because of low deliveries by Tesla for October according to insideevs even though this was expected with the factory changeover.

Sigh.

 

[EnzoXYZ]

I was considering selling a large chunk of my TSLA today and buying SCTY with it. (I was really salivating to do this yesterday after SCTY was falling and TSLA wasn't falling as much)

Today the arb gap is a bit smaller, though still substantial. $19.58 is equivalent to buying TSLA for $178.

Should I do this transaction before tonight's conference call? This is my conundrum. Either 1) I do it before the conference call in order to take advantage of the good news it is going to reveal, or 2) I am a victim of stupidly doing it before valuable information is conveyed thru the conference call, making me glad I waited until Wednesday to get a better deal or not do it at all!

I'm not selling TSLA to buy SCTY but probably going to add more SCTY before close. I'm was hoping the price would be below 19 but seems like others have similar idea thus not the price drop.
My read on tonight will bring light to why Musk originally stated the merger is a no brainer. I see anything that clears the fog with the merger as positive.
This is from the left field but there is some hope the disclosure will state soemthing to the effect TE and SCTY will contribute to positive cash flow late 2017 in a meaningful way.

 

[viKtor slamet]

My math from yester still holds true for today. TSLA is on a path to $0 by early next year with rate of -$4/day. But looks like it has accelerated to -$6/day. If my math is correct, there should be no more Tesla by xmas.. hmm..

 

[FredTMC]

Apparently WS is moving TSLA lower now because of low deliveries by Tesla for October according to insideevs even though this was expected with the factory changeover.

Sigh.

reactionary bad conclusions off of someone's estimates.

Sigh

Who owns this site (InsideEV)? I haven't looked yet...

 

[W84M3]

SMA200 at 191, major previous supports were 193 and we're at 192. hmmmmmm

 

[techmaven]

Apparently WS is moving TSLA lower now because of low deliveries by Tesla for October according to insideevs even though this was expected with the factory changeover.

Sigh.

Actually, the InsideEV's write up is pretty good, if people bothered to read it. Basically, we know that with the Autopilot 2 changeover and the production for overseas, very few U.S. deliveries happened. It makes a lot of sense... Autopilot 2 software isn't going to be enabled until later, so build out a lot of vehicles for overseas deliveries and by the time people get their vehicles in both the U.S. and overseas, the wait time for enabled the first raft of Autopilot 2 features is reduced.

 

[FluxCap]

I think discussing the shorts is not particularly effective.

Clearly, there is opportunistic short selling, often at the right technical points to try to influence the stock price. It's pretty clear if you watch the trading action.

However, the big problem isn't the shorts... it's the longs. They aren't buying in enough quantity, and worse, they are selling. The macro environment is not helping at all. I suspect we would be ok if a slew of non-Tesla related items didn't also point negative, including the NASDAQ at critical times and the whole Comey/Clinton thing. Look at the trading action of the solar stocks for example... look at the price of the TAN ETF. Just as the market was discounting Tesla's ER while digesting the possible upsides, the macro environment stuff made a lot of people just either get out or stay out. We need new buyers or big market makers to increase their stakes.

On top of that, I don't think Mr. Musk has been clear enough. Yes, he has had a slew of good news and he keeps showing us great things that he and his companies are trying to accomplish. However, they still aren't clear enough to signal to the markets that things really are ok. For example, some sort of better idea of the ramp of the Gigafactory and what that means for the financials in 2017 would go a very long way I suspect. A much clearer understanding of the Model 3 production ramp costs. Yes, they said they don't need additional capital, maybe, except to de-risk. However, the market completely discounted that statement. While many people want to hear from Musk, I actually want to hear more from the CFO, Jason Wheeler. I personally don't want Musk making any of the statements with respect to the financials, I want Mr. Wheeler as the CFO to lay out the fundamentals of how the company is getting from where we are today to a successful Model 3 launch and a Model 3 2018 500,000 build plan. I love to hear from Musk about the vision of the future, I want to hear from the CFO how that is going to happen with the financials. Clearly the market does not believe their capex and opex statements and wonders just how engineered the Q3 quarter was... and therefore information about Q4 is a very big deal.

And I want to hear more about exactly what they will be doing with SolarCity. What are the range of capex possibilities? How will they be changing around that company to assuage the fears of the long investors? The Solarcity acquisition has a lot of fear associated with it, and hopefully tonight they make it clearer to cut down on the fear.

The solar roof presentation was not enough. And I thought the presentation was, well, not very well done. They really didn't address a slew of the reasons why solar roof products have failed thus far. Tesla could make it work and differentiate from the various failed and lackluster products that have come before. I had looked at various solar roof products when I spent the $$$ to re-roof a couple of years ago and clearly the Certainteed and the Dow products were not truly viable. Tesla/Solarcity could solve a slew of the problems associated with that, but they didn't communicate the other night how they were going to do it. I have ideas how, but it should come from them how they expect to do it.

The real steak is commercial and utility level stationary storage which sometimes also includes solar. They didn't address Panasonic vs. Silevo vs. others vs. solar roof in a credible fashion. They didn't address margins with Tesla Energy. I suspect this is not the quarter to be talking about that, and it causes competitive advantage problems to tip too much of their hands for 2017. But we do need more clarity that we currently have with respect to 2017 given the situation with the merger. Remember, the Kauai project with 53 MWh of stationary storage + solar is a Solarcity project. Please tell us the important role that Solarcity presents for the expansion of stationary storage, and especially how Tesla will interact with the channel and integrators across the world, in parts where Solarcity has a presence and in areas where they don't.

For the past weeks and in direct contradiction to the opinions of the CEOs, management, large shareholders and boards of directors of both companies, the market does not understand or believe that the TSLA - SCTY merger is a value creating action.

I'm hopeful that tonight, that picture will become more clear. I too would very much like Mr. Wheeler to do a lot of the talking.

 

[racer26]

Actually, the InsideEV's write up is pretty good, if people bothered to read it. Basically, we know that with the Autopilot 2 changeover and the production for overseas, very few U.S. deliveries happened. It makes a lot of sense... Autopilot 2 software isn't going to be enabled until later, so build out a lot of vehicles for overseas deliveries and by the time people get their vehicles in both the U.S. and overseas, the wait time for enabled the first raft of Autopilot 2 features is reduced.

You expect people to actually read, rather than mindlessly react to the fact the number is less than the first month of 3Q16?

 

[ev-enthusiast]

As much progress as possible on SolarCity merger as soon as possible is very much appreciated.

 

[Matias]

On some further research, I'm not completely correct.

If load experiences a downward step change, (ie. 100MW down to 80MW because everyone's air conditioner just kicked off), the spinning generators will momentarily speed up due to the reduced resistance to turning. This results in an increase in the line frequency (which is also bad) and the system automatically dials it back by reducing generation power. This is how the 60Hz line frequency (in North America, 50Hz most other places) is maintained.

Solar generation doesn't work in quite the same way. Solar is generated as DC, and connected to the grid through solid state inverters which run at 60Hz/50Hz all the time. With increasing solar generation being installed, and the way its connected to the grid (generate @ 120V -> street level transformer up to 400-600V -> substation up to ~40kV -> substation up to 600kV high-tension transmission towers), and the distributed generation not being under the power company's direct control, this problem is becoming more difficult to manage than it used to be, and so in some cases they're resorting to resistive dissipation as I described to keep the grid in balance.

As solar penetration continues to grow, this problem will continue to get worse - we'll be generating way too much power at high noon, and not nearly enough in the night. Storage is the obvious solution.

As i wrote earlier, there has been rare occasions in Europe, when utility has paid customers to use electricity.

Germany has so much renewable energy that people are being paid to consume electricity

 

[esk8mw]

Order is in for more shares. This price action is insane.

 

[vgrinshpun]

Actually, the InsideEV's write up is pretty good, if people bothered to read it. Basically, we know that with the Autopilot 2 changeover and the production for overseas, very few U.S. deliveries happened. It makes a lot of sense... Autopilot 2 software isn't going to be enabled until later, so build out a lot of vehicles for overseas deliveries and by the time people get their vehicles in both the U.S. and overseas, the wait time for enabled the first raft of Autopilot 2 features is reduced.

I've been speculating about this for a while. This cadence of production also means that they will deliver in Q4 more than produce. I estimate that they will produce around 25K of cars, but empty about 3K of cars from the transit pipeline, which will result in deliveries of around 28K, at higher gross margin. They totally have a shot at another profitable quarter.

 

[gene]

Order is in for more shares. This price action is insane.

I picked up 200 shares at 191.5, very close to low of day. I'm usually not this lucky, so it may go lower.

 

[Ulmo]

Apparently WS is moving TSLA lower now because of low deliveries by Tesla for October according to insideevs even though this was expected with the factory changeover.

Sigh.

United States only sales? I'm amazed! Those numbers are stellar! October's sales in USA were 21% of September's! How can that be? They were very nearly depleted of inventory stock, and the factory isn't shipping to the USA for another month (early December, late November at earliest) (and no new cars made in October shipping to USA during October), and there's literally no other way they could have sold anything. Were these just "in-transit" at the end of September, like on trains and trucks? Or maybe they secretly stored a bunch of brand new cars at Fremont that weren't in the inventory list? Those are the only possible ways Tesla could have sold 21% as many in October as in September, and if that's true, then those in-transit numbers should add to the blowout Q3 sales job they did in kind (produced and sold in September) if not in fact (since they'll just show up in Q4 technically), and the factory making a bunch they were under-supplying the market with also shows the great sales pressures from buyers to get more. I'd expect that October number to be way way lower given the current Tesla factory scheduling, like as in, somewhere between zero and 100, not a freeking blowout October of One Thousand Six Hundred Fifty!!!

This helps explain why a few people got non-AP2 HW in October. Maybe Tesla should have clawed back those 1,650 sales, told the buyers no-go, and upsold them onto AP2 HW, and sold those older vehicles as discounted inventory. The complaint right now from Tesla enthusiasts is that Tesla sold and delivered too many in October (especially to those in USA), not too few.

Oh, and: so, the stock price went down on October delivery numbers? Ahem, why? That's completely illogical. Those are way more sales than I would have expected! Wow, what knuckledragger idiots sell the stock when delivery numbers are higher than expected? I'll have to write this down in my book: "Tesla sales in USA in first month of every quarter will be near zero (as we have all known for years), and knuckledragger idiots will put downward stock price pressure after release of the sales numbers for that first month in USA when they come out." If I had known that, I could have positioned myself to make money off this drop, not lose it. I thought after the first 6 times I saw this that it would have been better.

Edit: BAM! This is a lesson in preparedness. I had in my schedule in my trade book "11-1-~2: InsideEV est. Tesla US sales." But, I discounted that as silly, since it wouldn't be interesting to me. My discipline was lacking: I failed to anticipate the reaction to this number, and I didn't internalize the meaning it has to others. If I had done my homework last night, looked at the schedule, and really thought about it, I'd have come to the realization that this was a down day, yes because of the idiots, but I should have known better.

I was meant to be a scientist, not a herder.

@Tenable: did you fare any better?