Short-Term TSLA Price Movements - 2016

[racer26]

He can simply redraw the line to make everything fit.

Heh. No need, the market retraced back inside the trend. I'm not really surprised. I tried to get out of my riskiest position at 222 on open, but I was a little too slow on the trigger finger. That position will be fine as long as the trend holds, though - so I'm not panicking yet.

 

[ongba]

SP above the upper bollinger band on the daily chart with RSI above 70. Pullback to the 200 daily MA or 5 daily MA would be healthy.

 

[Jayjs20]

A lot of stock that were looking to blast off at opening are red right now, and it seems to be getting worst. On the other hand, if you wanted to get into nvidia, now's the day to do it.

 

[racer26]

SP above the upper bollinger band on the daily chart with RSI above 70. Pullback to the 200 daily MA or 5 daily MA would be healthy.

*shrug*

IMO, trading on technicals only works because people think it works. Its a self-fulfilling prophecy sort of thing. It works really well until news or fundamentals come along which totally crush it.

 

[NOLA_Mike]

On the other hand, if you wanted to get into nvidia, now's the day to do it.

Be careful on $NVDA:

Citron Research on Twitter

 

[Drax7]

The Model X braking before the accident happened is breaking news here in The Netherlands:

Video: Tesla reageert razendsnel op snelweg
Video: Tesla herkent ongeluk A2 en voorkomt erger - MT.nl
Cookiewall | BNR Nieuwsradio

Translation of headlines:

"Video: Tesla reacts superfast on highway".
"Video: Tesla recognizes accidents on A2 highway and avoids worse."
"Autopilot Tesla brakes before accident even happens."

Very good marketing. If this catches on to other markets/countries, Tesla could become the new "go-to" car for safety.

Go Tesla longs!

Tesla is disrupting the Luxury market.
Accelerating growth in that segment versus established brands, mercedes, bmw, audi , etc.
Teslas Valuation is starting to discount that.

Innovation that leads to disruption implies a cheaper product and a better product,
Tesla clearly disrupting luxury segment.

To achieve gorilla status it must disrupt in the lower market, thats model 3.

 

[racer26]

Tesla is disrupting the Luxury market.
Accelerating growth in that segment versus established brands, mercedes, bmw, audi , etc.
Teslas Valuation is starting to discount that.

Innovation that leads to disruption implies a cheaper product and a better product,
Tesla clearly disrupting luxury segment.

To achieve gorilla status it must disrupt in the lower market, thats model 3.

If 400k paid reservations for a car that wouldn't hit showrooms for over a year, in a market segment that sells around 500k cars per year isn't disruptive, I don't know what is.

 

[vgrinshpun]

We dropped after 9.55 wonder what the data says now?

Shorting activity is currently benign, the 98k borrowed before open at Fidelity were most likely deployed shortly after open. TSLA is skirting upper Bollinger band for the last 11 trading days. Every time it is popping above the band, it rolls back a bit to be just below the band and consolidates for day or two. It then takes another $5-$6 jump to catch up with the upper Bollinger Band.

 

[ongba]

*shrug*

IMO, trading on technicals only works because people think it works. Its a self-fulfilling prophecy sort of thing. It works really well until news or fundamentals come along which totally crush it.

Agree, but like you stated, in the absence of news or fundamentals, the technicals do play a role and serve as useful markers.

 

[Krugerrand]

Tesla is disrupting the Luxury market.
Accelerating growth in that segment versus established brands, mercedes, bmw, audi , etc.
Teslas Valuation is starting to discount that.

Innovation that leads to disruption implies a cheaper product and a better product,
Tesla clearly disrupting luxury segment.

To achieve gorilla status it must disrupt in the lower market, thats model 3.

I've just learned there's no such thing as 'disrupting'.

 

[racer26]

Shorting activity is currently benign, the 98k borrowed before open at Fidelity were most likely deployed shortly after open. TSLA is skirting upper Bollinger band for the last 11 trading days. Every time it is popping above the band, it rolls back a bit to be just below the band and consolidates for day or two. It then takes another $5-$6 jump to catch up with the upper Bollinger Band.

View attachment 208035

View attachment 208036

In other words, its rising at approximately the maximum sustained rate that it can, without triggering a technicals-based sell-off. Certainly smells like the actions of a big player who knows what they're doing.

 

[Drax7]

If 400k paid reservations for a car that wouldn't hit showrooms for over a year, in a market segment that sells around 500k cars per year isn't disruptive, I don't know what is.

execution kiddo, see to believe is what the market needs to see.
and as the likelihood increases, the valuation will reflect that

 

[neroden]

*shrug*

IMO, trading on technicals only works because people think it works. Its a self-fulfilling prophecy sort of thing. It works really well until news or fundamentals come along which totally crush it.

I was told once that serious technical traders apparently avoid news! They look for stocks with no news and avoid trading shortly before or after earnings!

 

[1kEE]

Isn't this sort of TSLA's cyclical MO though? A medium speed but fairly steady trudge upward for long periods of time, and big jabs down in a hurry, with the rest of the time trading relatively flat?

The way I see TSLA is:
It was originally undervalued (~20-30 SP), then rose up too far, too fast to ~$280 ATH. Two things have been happening since, the SP has been slowly correcting, while the company has been taking profits from making cars and aggressively re-investing it into equipment, R&D and real estate. Markets tend to overshoot, and as the actual value of the company has been going up last few years, the market has under-appreciated it. Eventually this trend has to reverse... and it maybe starting to happen.

 

[Irishjugg]

eh... my lower bound is really low... but if there were a similar drop equal to last year I wouldn't rule out $120.

Well we hit 145 on oil and China fears last year so 120 doesn't seem too crazy if we get back to an irrational market (or more than normal).
Thanks.

What do you consider a reasonable growth multiple for Tesla at this time. What I mean is, let's say that Tesla as a value company at steady state was valued at 50 or something. What do you think a reasonable multiple would be to account for the expectation of some level of continued growth?

 

[Irishjugg]

The drop in early 2016 was because everyone and their uncle was touting that TSLA will run out of cash within a few months and is likely to go belly up. The math was done extensively on when they need to raise a secondary and what the implications are etc etc so that pre ER the thing had gotten so bad on various analysis and news sites, that most people believed the worst case scenario. That's what sold it to 140 and as the ER showed a decent cash situation and plans for moving forward the shareprice quickly recovered to 200+ region. This is no longer the case now, we know what their cash cushion is, we know they have good lines to keep it flowing and they are showing operational cash flow that dampens the need for external funds. Such a huge drop is unlikely to just happen again early 2017.

Don't discount the multiplying effect that oil and China economic fears had. Tesla largely followed the oil price and market with a higher beta.

 

[neroden]

500M in increased credit lines
250M solar equity sale
250M Panasonic investment

= 1B in the last week with no dilution to shareholders.

I predicted the first two. Should have predicted the third one (it was known already) but didn't.

This is why I was pretty sure Tesla wouldn't be raising equity during Q1, and possibly not until Model 3 is coming off the line. They've figured out how to get other sources of capital. Cheaper capital. I calculated that they had about $1 billion in capacity which would not be needed for debt repayment for a year as of the end of Q3, and they said that they were going to spend about $1 billion on capital equipment in Q4. The Panasonic investment takes care of the Buffalo factory. So the latest raise in credit and equity sale gets them $750 million to spend on Model 3 in Q1. Plus whatever profits they make in Q4.

The ABL revolving lines are a near-infinite supply of lending for Tesla as long as they keep spending on *capital equipment*, which is most of Model 3 production setup. (Everything they buy is more collateral and allows them to increase the credit line.) This is why I really don't think they will need to raise equity before Model 3 is out.

It does mean that Tesla could end up quite highly leveraged. I do worry a bit about the potential effect of a rise in interest rates, since they're variable-rate borrowings. And I think Tesla will have to pay down debt sometime in late 2017, 2018 or 2019 to stabilize the debt/equity ratio, which may call for a stock dilution. Hopefully at a much higher stock price than today.

 

[Kenriko]

In other words, its rising at approximately the maximum sustained rate that it can, without triggering a technicals-based sell-off. Certainly smells like the actions of a big player who knows what they're doing.

I tend to agree the spike up along side the band makes me think this is a large technical trader at work and we're along for the ride.

Be wary of Paris. What Do You Really Know About Eiffel-Tower Patterns?

 

[racer26]

I tend to agree the spike up along side the band makes me think this is a large technical trader at work and we're along for the ride.

Be wary of Paris. What Do You Really Know About Eiffel-Tower Patterns?

That article was posted in yesterday's discussion of NVDA.

I think TSLA is different, here - NVDA, while growing, is a long established player in a space that roughly has 2 major players, NVDA, and AMD. That space isn't really growing a whole lot either. That market will ebb and flow between NVDA and AMD, and neither is really disrupting the other in any significant way.

TSLA, on the other hand, is a relatively new player in a stagnant space (autos), and is leading the charge in a relatively new space (solar/storage). TSLA is building a large moat in all its battlegrounds, and has objectively superior technology and lower costs on important components than any competitor.

In addition, TSLA is headed into some very positive catalysts.

 

[racer26]

I predicted the first two. Should have predicted the third one (it was known already) but didn't.

This is why I was pretty sure Tesla wouldn't be raising equity during Q1, and possibly not until Model 3 is coming off the line. They've figured out how to get other sources of capital. Cheaper capital. I calculated that they had about $1 billion in capacity which would not be needed for debt repayment for a year as of the end of Q3, and they said that they were going to spend about $1 billion on capital equipment in Q4. The Panasonic investment takes care of the Buffalo factory. So the latest raise in credit and equity sale gets them $750 million to spend on Model 3 in Q1. Plus whatever profits they make in Q4.

The ABL revolving lines are a near-infinite supply of lending for Tesla as long as they keep spending on *capital equipment*, which is most of Model 3 production setup. (Everything they buy is more collateral and allows them to increase the credit line.) This is why I really don't think they will need to raise equity before Model 3 is out.

It does mean that Tesla could end up quite highly leveraged. I do worry a bit about the potential effect of a rise in interest rates, since they're variable-rate borrowings. And I think Tesla will have to pay down debt sometime in late 2017, 2018 or 2019 to stabilize the debt/equity ratio, which may call for a stock dilution. Hopefully at a much higher stock price than today.

I expect TSLA to lean heaviest on selling off SCTY cashflows - its an asset they have, which while valuable, will be a drop in the bucket in 20 years time, but could be leveraged now to stave off the need for any equity raises. I don't expect them to need to significantly increase exposure to interest rate risk.

That 250M was only a small piece of the billions in future cashflows from installed SCTY systems that TSLA owns. Monetizing the rest is as simple as finding a buyer.