Short-Term TSLA Price Movements - 2016

[Xpert]

I guess we'll choose to disagree here. One day, Tesla won't need to raise capital because profit will be flooding in... but that day is not here. Right now Tesla might say they don't "need" to do a capital raise immediately... but that's code word for "We really ought to do a cap raise soon, but we'll say we don't need to do one so we don't look desperate. But first chance the stock price looks good, we're doing a cap raise. And if stock price stays low, then we'll be forced to do a cap raise, probably sooner than later." In other words, cap raise is coming within next 2-6 months, and it's because they "need" to, especially since SCTY acquisition brings on additional execution risk and they need a bigger cushion for that.

I will disagree with the idea that cap raise is a "need". Rather It is code word for "nice to have but not required." I truely believe Elon is an honest guy and means what he says. They have enough cash and credit line to get through model 3. Next year S,X will have higher margin and profit as well as income from TE. Ideally they raise to derisk and perhaps ramp model 3 faster, but not required.

 

[anticitizen13.7]

Three items:

(1) Having reviewed the available information, I have voted online FOR the merger of Tesla and SolarCity. The product ecosystem of solar generation, stationary storage, and electric vehicles makes a lot of sense. The stronger financial position of Tesla and SolarCity reduces some of my prior concerns about SolarCity's debts. I am trusting Elon and Jason Wheeler on this, but if I didn't trust them, I would have exited my holdings in Tesla long ago.

(2) I do not expect to participate in this thread going forward, although I will stay around the forum generally, but mostly in the background. In the past, I used this thread to get a jump on Tesla news, but the quality of reporting from sites like Electrek.co means that I can usually get the latest without having the wade through posts here. Frankly, the level of discourse in this thread over the past year has been appalling, and it is now impractical for me to sort through the morass of cheerleading, trolling, and FUD spreading here.

(3) Parting words: Don't invest (or gamble) more than you can afford to lose, as TSLA can be extremely unpredictable in the short term, regardless of events or macro conditions. I don't risk my retirement funds on TSLA, and I don't believe most people should either. I believe that Tesla likely has a bright future ahead, but I have no idea if/when TSLA will exit the current plateau and head upwards. This is a stock that I believe must be held for years or even more than a decade in order to realize its highest potential. Finally, I'd encourage people to have some fun with this once in awhile, by which I mean for anyone who hasn't, buy a Tesla, or test drive one if you can't afford it yet. There is something pretty inspiring about the Tesla family of vehicles, which is really only apparent from behind the steering wheel. A Tesla automobile is something I look forward to eventually owning, whether it is a Model 3 or Model Y.

I'll be around.

 

[Xpert]

I, for one, hope it doesn't go to $100. Lower the stock price, the more difficult it is to raise capital needed for Tesla's cap ex including Model 3 ramp, Model Y, Semi, Tesla Network, GF #2, etc. If you're a true Tesla fan, you don't want it to drop to $100 as that could seriously hamper Tesla's plans.

I am in the camp that hope it will go lower to $100, getting more cash ready to pound. Buying at $100 would be like winning powerball. No cap raise needed, the moment model 3 ramp happens its game over.

 

[TMSE]

Hmm.. looking at the comments from several long term Tesla fans, many of them are fence sitters now, waiting for the bottom so that they can swoop in and get the best deal! Good luck with that!

 

[roblab]

I am in the camp that hope it will go lower to $100, getting more cash ready to pound. Buying at $100 would be like winning powerball. No cap raise needed, the moment model 3 ramp happens its game over.

...and then Tesla, seriously damaged, folds. You got it. Game over. I hope it goes to $400, myself. But since I bought at $19, I'm not too worried either way.

 

[TrendTrader007]

i'm not worried about TSLA SP. it is resting right on support and i see no cause for panic. as far as $100 or $150 it just reflects irrational pessimism on this board which is fine since it portends a bottom on short order, taking a contrarian stance.
nothing unique about TSLA, anytime any stock goes down a few days in a row, the herd expects the worst and vice versa
i have never ever made big money in any stock, ever, without first going through drawdowns of at least 20% if not more and TSLA is no exception.
even though i'm facing margin calls i have no desire to sell anymore than the absolute minimum, which is a very small % of my position, just enough to meet the calls and i stay super long and strong TSLA
(no, it's not going down to the prices mentioned on this board, i fully expect a furious rally any day now and even if it does not happen right away, i will patiently sit it out and at the end of all this come out far ahead $$$)
also, anytime with a stock like TSLA it seems like the bottom is about to fall out, it is the bottom
for what it is worth

 

[CALGARYARSENAL]

i'm not worried about TSLA SP. it is resting right on support and i see no cause for panic. as far as $100 or $150 it just reflects irrational pessimism on this board which is fine since it portends a bottom on short order, taking a contrarian stance.
nothing unique about TSLA, anytime any stock goes down a few days in a row, the herd expects the worst and vice versa
i have never ever made big money in any stock, ever, without first going through drawdowns of at least 20% if not more and TSLA is no exception.
even though i'm facing margin calls i have no desire to sell anymore than the absolute minimum, which is a very small % of my position, just enough to meet the calls and i stay super long and strong TSLA
(no, it's not going down to the prices mentioned on this board, i fully expect a furious rally any day now and even if it does not happen right away, i will patiently sit it out and at the end of all this come out far ahead $$$)

Wishing you nothing but the best. Great insight.

 

[tlo]

Is there a link where we can still listen??

It's right on the Tesla IR site... Webcast to Discuss Tesla's Pending Acquisition of Solar City | Tesla Motors

I had the same initial reaction as many here in thinking that the letter/call was quite awful. Not much financial detail. No meat in the answers. Just repeating the mission and "synergies" that we have heard.

I believe this was intentional. The merger vote is in the bag and they no longer need to show any more cards to convince shareholders. They just couldn't cancel the call.

Remember that shareholders have the right to change their vote prior to Nov 17. So even if they have the votes needed now, they can't say it's a done deal. But what they said is as close as it gets to actually saying it's a done deal.

I will be watching SCTY arbitration gap in next few days.

 

[BobSk]

I don't know if this has been posted. Powerwall 2 price went up by 42%? I remember it was at $5500. Now $7800.

I thought that $5500 was too low. Now it makes more sense. Probably the orders were way too strong at $5500.

Update: I was wrong. My web was set to Canada.

 

[CALGARYARSENAL]

I don't know if this has been posted. Powerwall 2 price went up by 42%? I remember it was at $5500. Now $7800.

I thought that $5500 was too low. Now it makes more sense. Probably the orders were way too strong at $5500.

Is that Canadian dollars????

 

[Value Ev]

I don't know if this has been posted. Powerwall 2 price went up by 42%? I remember it was at $5500. Now $7800.

I thought that $5500 was too low. Now it makes more sense. Probably the orders were way too strong at $5500.

Was that on the call?
The website still has it as $5500 + 1k for installation.

 

[LargeHamCollider]

I don't know if this has been posted. Powerwall 2 price went up by 42%? I remember it was at $5500. Now $7800.

I thought that $5500 was too low. Now it makes more sense. Probably the orders were way too strong at $5500.

Still shows $5500 for me.

 

[CALGARYARSENAL]

Was that on the call?
The website still has it as $5500 + 1k for installation.

I think he is looking on the Canadian site.....

 

[sundaymorning]

I am in the camp that hope it will go lower to $100, getting more cash ready to pound. Buying at $100 would be like winning powerball. No cap raise needed, the moment model 3 ramp happens its game over.

Seriously, the chances of Tesla getting to 100 is like winning the powerball, every.. Single.. Day.. of your life.. ain't gna happen. But using the short logic here, anything is possible since Elon is a scumbag. He was a scum when Tesla produced less than 5,000 cars per year and is a scum now at 80,000. Even if he gets to 500,000, which by the way would be equivalent to GM producing 3,000,000 cars, Elon would still be the same lyin scum. Ignore the noise, just keep buying in if the price drops further. Hold it for 5-10 years...

 

[BobSk]

Is that Canadian dollars????

You are right. Thanks!

 

[Value Ev]

He was a scum when Tesla produced less than 5,000 cars per year and is a scum now at 80,000. .

The current guidance is to do less than 80k this year.

The original plan was 80-90 which was reconfirmed after Q1 earnings.

However, in Q2 earnings, they lowered it to a target of 50k in the second half which if they achieve, means they miss the low end of the original plan.

 

[techmaven]

I guess we'll choose to disagree here. One day, Tesla won't need to raise capital because profit will be flooding in... but that day is not here. Right now Tesla might say they don't "need" to do a capital raise immediately... but that's code word for "We really ought to do a cap raise soon, but we'll say we don't need to do one so we don't look desperate. But first chance the stock price looks good, we're doing a cap raise. And if stock price stays low, then we'll be forced to do a cap raise, probably sooner than later." In other words, cap raise is coming within next 2-6 months, and it's because they "need" to, especially since SCTY acquisition brings on additional execution risk and they need a bigger cushion for that.

I think it comes down to timing.

Let's look at their cash needs:

For Model 3 launch (going through Q4, 2017), assuming 250,000 unit build plan
$1.2 billion for the equipment for Fremont for initial Model 3 production
Let's call it $25 million for finishing up Gigafactory phase 1
$75 million each quarter capex in addition for Superchargers and various retail/service build outs worldwide
$125 million for installation of equipment, Fremont expansion that is not equipment

That's $1.65 billion to launch the Model 3, but that doesn't count the parts up front ramp. Now, if they can get suppliers to take delayed payment terms that they implied, then the ramp isn't as bad if the launch goes relatively smoothly unlike the Model X launch.

Cash on hand is $3.1 billion. They would like to have $1 billion in cash and they have access to another $750 million in ABL.

Now, the issue is the timing of the 500,000 unit build plan for 2018. For that, we have at least:
Spending $400 million on Gigafactory phase 2, of which has already started in Q3, 2016
Spending $3 billion to expand Fremont again
Ongoing expansion of Superchargers and retail/service locations in 2018.

So the issue is when does the capex spend for 2018 hit? Some is already hitting with Gigafactory expansion. They will likely spend the $400 million spread through 6 quarters, or roughly $70 million each quarter until the last quarter. Panasonic starts their investment in that section in Q3, but really in Q4 of 2017. If it takes 2-3 quarters to have the factory expansion done, and Tesla does the 500,000 unit build plan in two sections, then the capex spend for the first section would likely start in Q3 of 2017. Then the next section would be Q4, 2017 to Q1, 2018. Of course, that amount doesn't happen all at once.

The real question is whether or not Tesla gets TE profits in 2017 in order to pay for the 2018 500,000 unit build plan. It seems that the Model 3 launch is not the problem, it's the timing of the capex for 2018 and the Model 3 launch S curve that will determine things. Clearly, if Tesla had an extra $1 billion or $2 billion, Tesla could freely choose to start the expansion to the 500,000 build plan pretty much directly on the heels of the 2017 expansion.

 

[Papafox]

The current guidance is to do less than 80k this year.

The original plan was 80-90 which was reconfirmed after Q1 earnings.

However, in Q2 earnings, they lowered it to a target of 50k in the second half which if they achieve, means they miss the low end of the original plan.

You are really going to challenge sundaymorning for giving the original 2016 estimate instead of the adjusted estimate which is about 1,000 cars less? He made no claim that 80,000 was the current 2016 estimate, he just said 80,000 cars. By the way, how was his punctuation? He was comparing 5,000 vehicles to 80,000 vehicles.

 

[esk8mw]

In case there was any doubt, this vote is done and the merger will pass. The only out now would be a major SP decline or major institution flipping its vote last second.

As I think I described in an earlier post, I'm very familiar with tracking votes like this one. Elon is working with his proxy solicitor and getting daily (or more) updates on the vote tally. They are probably also conducting institutional shareholder outreach, which is where you invite your largest holders to have 1-on-1 calls to discuss the merger rationale and answer any questions they have (within the limits of what's allowed legally).

Based on those calls, the Company will have a pretty good idea if the institution is in favor of the vote. You can tell from tone and the tenor of the questions (plus they like to drop some obvious hints here and there). The solicitors also have a lot of contacts at these places. Once the big vote results come in, the solicitor can discern (usually with 95%+ accuracy) who just voted and how they voted. At some point, it becomes close to set in stone how the vote will end up, unless a big institution changes its vote at the last second. I can generally track where votes will end up within 2% of the actual final vote as the voting date draws near for clients.

TL; DR: When Elon said he's pretty sure he has the votes, he does in fact already have the votes. I listed the 2 possible outs above; decide for yourself what the probability of those events is and invest accordingly.

 

[sundaymorning]

The current guidance is to do less than 80k this year.

The original plan was 80-90 which was reconfirmed after Q1 earnings.

However, in Q2 earnings, they lowered it to a target of 50k in the second half which if they achieve, means they miss the low end of the original plan.

Whether they'll hit or miss the 80k mark is yet to be determined. But hey if missing the low end by 1-2% means Elon is lying then keep shorting all the way till 500,000.