Social Chat - Short Term TSLA Movements

[chickensevil]

I don´t quite see where the pessimism of some in here comes from. Did I miss a meeting or isn´t there a single fact that predicts bad results for Q3 ? Also I totally disagree with Elon Musk and others on the stock being overvalued. Clearly the market today has totally missed or underestimated what yesterdays Nevada legislation decisions and governor Sandovals swift signature meant. So that is definitely not priced in. Perhaps it will sink in when the groundbreaking event of the GF will take place. I think we have reason to believe that will do the stock price more good than harm short term...

So the pessimism starts with the flat sales projection vs the continued massive increase in spending. Now, I am not worried about the long term effect this will have on the company or the stock, but it is likely to cause a pause on investors when this ER comes to pass.

Second, historically (I know, I know, past performance is no guarantee of future results, blah, blah, unicorns) the stock has only been able to do around a 3-5 month run before having a serious pullback (note, we are currently in a stagnation not a pullback... I am talking dropping down to 265+) The pullback has lasted around 2 months and then we go back full speed. The one thing different this time around is the shorts that are in the stock. If we drop and the shorts don't pile back in, I am afraid it will be a struggle to get back up again.

Third, there is a chance that deliveries could be a miss. Based on all the delays people have been reporting and other anecdotal evidence, there is a chance. I would say... around 20% chance right now for a delivery miss. This is going to be rough if that happens.

Fourth, Model X reveal isn't likely (I could be wrong... which is something that would totally help float the stock) to happen until mid Nov. Based on "we will have the alpha next week after the factory restart, and then in Q4 we will start the Betas for the Model X" (Paraphrasing). Based on Tesla time, I would be surprised if we actually see this any time sooner... but I am hoping!

Fifth, gigafactory, This has been a thorn in our side for a while. We keep hoping that each news event on this will cause a rise in the stock, and it hasn't happened. At least I haven't perceived it as such. I think this is still a pipe dream to many people and won't be reality until they are actually pushing out cells. So for someone who is long the stock, every time they post an update on the factory this is great news for you, buy more shares because by 2017 I am positive you won't regret it... short term... not so much. This is the third major time something significant has moved regarding the factory and yet again, the market is giving us no love.

All this adds up to a stagnating momentum stock, coming off all time highs, with nothing to push it further and plenty of short term negatives standing in our way that is likely to drive the price down.

I could be wrong, I hope I am wrong (I am actually setting up for a movement in either direction, I just hope that the stock doesn't stay flat... cause that will hurt) I hope for the shareholders sake that the stock continues to go up, but I just don't see it right now.

The good news in all of this, Q4 is totally setting up for a potential blowout. If anyone is looking to buy shares, you might be getting your best chance to buy that you haven't had for a while. regardless of where the stock goes over the next month or so, the story hasn't changed. The future outlook hasn't changed. You are likely to get a discounted price on these shares long term and it will make the perfect buying opportunity. If the stock continues flat or even slightly up, you will be great still, because with Q4 and beyond the stock still has a positive side to it.

 

[ckessel]

Remember that Q3 last year seemed pretty darn good to those of us that are looking to the future, but the stock completely plummeted after the ER. Even a perfectly fine ER couldn't hold the stock price up to the fervor that had risen it in the weeks leading up to the ER.

 

[Tasmanian Devil]

Ok. I get You.

to Your first point: I don´t know about the sales projection but doesn´t everything hint that every car made is ripped out of Teslas hands immediately. How can the sales prediction be bad ? The increase in spending was to be expected, more Superchargers, more R&D, GF expenses. This is normal for a company in built up, isn´t it ? They also raised a billion for the factory already that´s sitting in their wallet right now paying dividends until it gets used for building the GF ?

second: I must refer to the "blabla" here : historical stock prices are no indication on the future whatsoever. The future is open.

third: I have read about delays for some but that could very well be because Tesla is stretched over three continents now, all of them eager to get their share of cars. So the added up deliveries are probably in line.

fourth: I think You underestimate the impact of photos of the first Model X alpha on the road or at a supercharger will/might have. I bet a lot of people on this forum already have all their antennas up to spot it asap.
That might skyrocket the stock price more than anything atm.

fifth: Governor Sandoval signed yesterday. i have never seen a government acting so fast ever. That´s all Elon Musk waited for. I bet he will not waste too much time until the groundbreaking. That might have a good short term impact.

You say the stock is stagnating. I wouldn´t call an 8% gain in the last month a stagnation. Sure we have done better in the past yay. But 8% - that is a lot. That is more than many stocks can hope to make in a year.

I totally agree with You on the blowout long term. But I really don´t see bad news ahead. Though I wouldn´t rule out that You are right about the stock stagnating for a while. I am just confident that one of the things I mentioned will bring us forward probably sooner than later. Perhaps as soon as next week. I believe we will see the groundbreaking in a very short period of time.

- - - Updated - - -

Yep @ckessel I remember that too well :cursing:. But it is very probable that the Q3 announcement will take place after the groundbreaking and hopefully after that Model X Photo went viral. The market will recognize more than back then that Tesla doesn´t just produce hot air. So I am confident that this Q3 the stock market will react accordingly to what Tesla produces.

 

[austinEV]

Chicken: awesome summary! I agree with your sentiments.

TD: I think we "Q3 pessimists" think that the market will not react well to flat deliveries and a GAAP and non-GAAP loss. While we here can understand why that is, this will play into the bear narrative perfectly: QoQ delivery slowdown and "flat" sales in North America and higher spending (probably) due to model X and Gigafactory building. The seeking alpha headlines write themselves: "Tesla motors sales down, yet plan to spend billions of taxpayer dollars to expand production". Ouch and ouch. Wrong, but a nice narrative.

IF that plays out, then it would be the buying opportunity not seen since April 2013 since Q4 would indeed be set up to be a monster beat since they can go guns blazing with their 2 lines and model X realities will start to roll in for sure.

Just a bit of fiction writing here. It may not go like this at all. Maybe they announce juicy Model X things in the next 2 months and that is the narrative and the stock hits ATH's and shrugs off the Q3 results.

As for the factory, I don't expect the market to EVER react positively to anything about the GF again until it is online, making real sellable batteries, and better yet faster and cheaper than anticipated. Unfortunately, a lot of news/rumors about the factory could weigh down the stock for the next few years. Any perceived delays, problems with the partners or anything could potentially cause a negative. Also every dumb story about super batteries or super hydrogen would bolster the narrative that the GF is going to make batteries that will be obsolete in 2017.

 

[Fast Laner]

Good evening/morning all around the world!

Here is a link by maoing from the China Thread with endless cars in a row waiting to be delivered.

Where is the harbour located in CA the freight ships are loaded and how frequently do freight ships leave CA for China and how many cars such a freight ship usually carries away?

Does anybody have a clue?

http://club.autohome.com.cn/bbs/thread-c-2357-33623127-1.html

 

[Tasmanian Devil]

@austinEV: Thrilling times ahead for sure I guess at least we still all agree that long term we will all be rich

 

[c041v]

Great updates everyone! Lots of good discussion considering this is "chatter" thread.

I'm just chiming in to say I sold off the last of my J15 Call, for a bit of a loss. I debating holding them longer to capture some Gigfactory news, but Theta was eating into them more and more each day. I've now got a bit of cash to take advantage of any dip/Q3 nonsense/J17's. Wish I knew what I know now 18 months ago about options and investing in general. I will forever kick myself for recognizing what TSLA would become, and not having the Investor knowledge to properly capitalize on it.

Still holding ITM J16's that are nice and green

 

[chickensevil]

@austinEV: Thrilling times ahead for sure I guess at least we still all agree that long term we will all be rich

Yeah I am not at all saying that we are looking at a crash and burn scenario here, just being cautious in the upcoming month because the stock could really go either way. There is nothing saying they will show the MX Alpha at all and it is very likely that they wouldn't since the precedence has been set by both the roadster and the MS. You get to see the wonderful concept and then you get to ride around in the Beta's... I don't think Alpha stuff on either car model previously really got leaked out from the company when it would be relevant.

I want to address your confusion on what I am saying about the Q3 results. They are only to do like 200 more deliveries this quarter over the last. That impacts their revenues because it will basically be flat revenue. Then look at their guidance for SG&A, R&D and Cap-ex spending... That stuff is all going up by like 20%. Without the revenue going up by at least 20% as well it is going to be tough to see a scenario in which they post even a non-GAAP profit. They haven't been non-GAAP negative since like Q3 of 2012 or some such. That is what drove the stock into its initial breakout was them turning a profit... To go back into the red will shale some people up and likely hurt the stock pretty bad. I hope we don't see red in Nov but I am not going to bet the farm on a hope.

Again long term this is hot air. The sales numbers are not flat because of demand and they need to continue spending money to expand in every way possible. They are sitting on almost 3Bn in cash so burning cash negative isn't necessarily a bad thing and would be expected. Anything gigafactory spending related will thankfully be stripped from the non-GAAP numbers (or it should be) since this is all considered "one-time expenses) but still... The ER numbers even if they do hit guidance on deliveries is not going to look pretty.

Now combine that with the chance (I still say it is a small chance, but the chance is there) of missing production numbers and therefore delivery numbers and you have the chance of a REALLY negative ER.

As AustinEV says... The headlines kinda write themselves at that point and they will have all the fuel and pointless dribble they could want to drive their short story about a CEO who is lying through his teeth, a company who can only sell cars because of government handouts, a company whose sales are clearly dropping I mean look they couldn't even sell enough to meet their guidance (cause these people don't believe in the production constraint thesis).... On and on.

Honestly it is a good thing... Because regardless of what happens to the share price this Q should help entice shorts back into the stock. I mean... Thishouse of cards is just waiting to fall... Who am I to argue with that logic?

 

[ckessel]

Yep @ckessel I remember that too well :cursing:. But it is very probable that the Q3 announcement will take place after the groundbreaking and hopefully after that Model X Photo went viral. The market will recognize more than back then that Tesla doesn´t just produce hot air. So I am confident that this Q3 the stock market will react accordingly to what Tesla produces.

Yea, we all kept pointing at positive upcoming catalysts back then too. The X prototypes are expected, it's been talked about in ER conference calls. The gigafactory is all old news. What'd move the stock is the factory not moving forward as expected. Elon did say they were keeping some R&D stuff a secret though, which if that is revealed, who knows?

The last two ATH had roughly 50% drops off of their gains (i.e. 120->245 gave back ~60 of it, a similar thing happened off the first ATH). Maybe this time will be different...

 

[Lump]

Hoping the X alpha is going to have significant impact on the stock is beyond me after watching the gigafactory site selection, terms of the deal & unanimous approval leave it flat.

 

[DaveT]

Remember that Q3 last year seemed pretty darn good to those of us that are looking to the future, but the stock completely plummeted after the ER. Even a perfectly fine ER couldn't hold the stock price up to the fervor that had risen it in the weeks leading up to the ER.

Q3 2013 was a disappointment (at least I was very disappointed and shared so immediately after the call and in the days that followed) since they didn't give any guidance for 2014, while the stock was a crossroads and needed that guidance. And then the fires hit. IMO the stock should have never dropped all the way to $116.10 if Tesla would have issued 2014 guidance of 35k cars. I think the fires would have taken TSLA to $133 (where there was strong support) and 2014 guidance would have kept it above that. But without any 2014 guidance, the stock was free to fall further than $133.

 

[AlMc]

Well, if Q3 is not as good as TM hoped for..could we finally see those ZEV credits being used?

 

[DaveT]

I want to address your confusion on what I am saying about the Q3 results. They are only to do like 200 more deliveries this quarter over the last. That impacts their revenues because it will basically be flat revenue. Then look at their guidance for SG&A, R&D and Cap-ex spending... That stuff is all going up by like 20%. Without the revenue going up by at least 20% as well it is going to be tough to see a scenario in which they post even a non-GAAP profit. They haven't been non-GAAP negative since like Q3 of 2012 or some such. That is what drove the stock into its initial breakout was them turning a profit... To go back into the red will shale some people up and likely hurt the stock pretty bad. I hope we don't see red in Nov but I am not going to bet the farm on a hope.

Again long term this is hot air. The sales numbers are not flat because of demand and they need to continue spending money to expand in every way possible. They are sitting on almost 3Bn in cash so burning cash negative isn't necessarily a bad thing and would be expected. Anything gigafactory spending related will thankfully be stripped from the non-GAAP numbers (or it should be) since this is all considered "one-time expenses) but still... The ER numbers even if they do hit guidance on deliveries is not going to look pretty.

Now combine that with the chance (I still say it is a small chance, but the chance is there) of missing production numbers and therefore delivery numbers and you have the chance of a REALLY negative ER.

I agree that Q3 earnings don't look great. It's true they aren't delivering many more cars than Q2 (which means revenue is flat) and they have added one-time expenses of the powertrain warranty, all while they have fast-growing expenses. And the factory after retooling has been slower than expected with production (although I think they will met Q3 delivery guidance of 7800 vehicles delivered).

However, if Tesla meets delivery guidance for Q3 and even if they're non-GAAP non-profitable, I still think there's the bigger backdrop of a huge Q4 guidance (over 13k vehicles delivered) along with the bigger backdrop of Q1, Q2, Q3 2015 being massive quarters of production ramp toward their 100k production run rate by end of 2015.

 

[DaveT]

However, if Tesla meets delivery guidance for Q3 and even if they're non-GAAP non-profitable, I still think there's the bigger backdrop of a huge Q4 guidance (over 13k vehicles delivered) along with the bigger backdrop of Q1, Q2, Q3 2015 being massive quarters of production ramp toward their 100k production run rate by end of 2015.

In other words, what happens if/when Tesla reports Q3 with slight negative eps non-GAAP and barely meets 7800 delivery guidance, but reinstates 2014 guidance of 35k deliveries along with 13,000+ vehicles delivered in Q4?

I say it's positive. That's why I'm not a Q3 pessimist.

People already know Tesla needs to take a one-time charge for the power train warranty, so this is already factored in somewhat to Q3 forecasts. Even if Tesla reports slightly negative eps, I don't think it's a big issue. It's only when Tesla surprises in a negative way, then it would be negative.

But the bigger issue will be guidance and the growth trajectory of Tesla. They'll need 13,000+ deliveries in Q4 to meet their 35k guidance, so as long as they keep their 2014 guidance then their Q4 guidance will be massive. Of course there's risk that Tesla lowers 2014 guidance of 35k deliveries. So if you think that they will do that, then I can understand why you might be a "Q3 pessimist". But if you think they're going to re-affirm 2014 guidance of 35k deliveries during the Q3 shareholder letter/call, then basically you're saying that Tesla will give a massive 13,000+ delivery guidance for Q4 and the market will react negatively due to other factors. Hmmmm. #confused

 

[anticitizen13.7]

I'm not at all worried about Q3 delivery numbers. What I'm looking for is Q4 guidance (did the factory line upgrades result in the expected increased productivity?), Model X news, and maybe 2015 guidance. If plans are on track, the stock may bounce around a bit, but ultimately revert to its steady path upwards.

 

[Chickenlittle]

I'm not at all worried about Q3 delivery numbers. What I'm looking for is Q4 guidance (did the factory line upgrades result in the expected increased productivity?), Model X news, and maybe 2015 guidance. If plans are on track, the stock may bounce around a bit, but ultimately revert to its steady path upwards.

I agree with you and will even go out on a limb and say q3 has the greatest chance for a large beat than we have seen. So little expected yet new line could do a lot more than before. Vin counting deliveries estimates all uncertain. Orders are out there. Factory closed two weeks so a lot of reports out there about decreasing sales in USA in august. However, battery pack assembly did not have to stop for upgrade of the production line so plant may not have been totally idle for those two weeks. Guidance could be very large for 4thqtr. Will not buy calls for it unless large drop in stock price before but also would not sell covered calls going into report either

 

[MikeC]

Well, if Q3 is not as good as TM hoped for..could we finally see those ZEV credits being used?

I believe they used ~$11 million in ZEV last quarter and I think they will use more if/when needed.

 

[chickensevil]

But the bigger issue will be guidance and the growth trajectory of Tesla. They'll need 13,000+ deliveries in Q4 to meet their 35k guidance, so as long as they keep their 2014 guidance then their Q4 guidance will be massive. Of course there's risk that Tesla lowers 2014 guidance of 35k deliveries. So if you think that they will do that, then I can understand why you might be a "Q3 pessimist". But if you think they're going to re-affirm 2014 guidance of 35k deliveries during the Q3 shareholder letter/call, then basically you're saying that Tesla will give a massive 13,000+ delivery guidance for Q4 and the market will react negatively due to other factors. Hmmmm. #confused

I guess because I am factoring in a 20% chance of a miss on Q3 (I ran the numbers a bunch of different ways, they do have a TON of leeway here to meet the guidance... but there was a ton of reports confirming that the line didn't start up as quickly as planned and delivery delays pretty much across the board... it is going to be close I think) I think that IF they miss, even IF they reassure that they somehow pull some 14,000 deliveries out to make up for the miss, I think people are not going to buy it, and there will be a panic and sell off. If they meet the guidance we could see the stock just trade flat depending on how negative in the red they are.

Estimize has the Wall Street Consensus at .07 EPS and 859.47M Revenue... which the Revenue is estimated flat from previous Q (as it should be) but they are still shooting for a positive EPS. (and don't get me started on where Estimize itself is at... they are much higher... and I am scared at that thought.

Businessweek is saying an EPS of .02 and Revenue of 892 (which is much higher revenue but much lower EPS)... So even they are assuming Tesla will pull out positive on the EPS... Very few people seem to be in the negative here on the EPS... So it would totally be a miss to post a negative EPS because noone is expecting it... and that is why I say the price will drop even if they just MEET guidance... because earnings is going to miss most people's expectations (unless they sell off all of their ZEV credits haha! I mean they have like 200+ of them... what is the going rate for these things?).

If people were estimating them post negative I would say we would be safe... but not enough are, that this is likely to be a huge miss this quarter. I think Tesla knows this, which is why they have been trying to set expectations and also give a massive glimpse into the future... but does Wall Street have the stomach to wait around till next year? It is a tough call...

Of course all of this might change if we start getting some really positive estimates on September deliveries... but I don't know, I remain skeptical.

 

[Curt Renz]

Remarkably, his first TSLA tweet was on 5/29/2013.

"Self," I asked myself. "I wonder how closely 5/29/2013 correlates to TSLA's initial liftoff?"

"Well, self," I said, "pretty closely."

Total coincidence, I'm sure.

TSLA was trading around $100 that day. He's apparently held a TSLA short position since then, either personally or for his hedge fund clients. He's been a non-stop FUD machine with his tweets and Seeking Alpha articles & comments for well over a year. He must have lost a ton for himself or his clients. I'd feel sorry for him, except his campaign has been designed to take good people down with him, either by discouraging purchases or encouraging short selling.

 

[DaveT]

I guess because I am factoring in a 20% chance of a miss on Q3 (I ran the numbers a bunch of different ways, they do have a TON of leeway here to meet the guidance... but there was a ton of reports confirming that the line didn't start up as quickly as planned and delivery delays pretty much across the board... it is going to be close I think) I think that IF they miss, even IF they reassure that they somehow pull some 14,000 deliveries out to make up for the miss, I think people are not going to buy it, and there will be a panic and sell off. If they meet the guidance we could see the stock just trade flat depending on how negative in the red they are.

I think there's a good chance (ie., 30-40%) that they actually miss Q3 guidance on # cars produced by 200-400 cars (guidance was 9000 cars produced). But I think they'll meet guidance on deliveries (7800 cars) because they have a lot of options (ie., selling cars in pipeline or inventory cars). So I think Tesla missing guidance on cars delivered is relatively low (maybe 10-15%).

In terms of profitability, Elon already mentioned with the power train warranty announcement that Q3 could negatively affected. I think Estimize and such places aren't factoring in real-time estimates from the analysts that matter. Also, whether Tesla is $0.05 eps non-GAAP or -$0.05 eps non-GAAP... I don't think it has a big impact. Actually, let me rephrase that. If there is vague or weak forward guidance then having a slightly lower eps (even negative) than expected is going to negatively affect Tesla's stock price. However, if the following quarter's guidance (and following year) is very strong then I think a slight miss on earnings eps won't have much impact. The more important issue is Tesla's trajectory and whether they're on track to meeting Q4 guidance or not.

Also, Q3 earnings will happen in early November so Tesla will have good visibility into Q4 and I think if they re-affirm 35k deliveries for 2014 and 13k+ deliveries for Q4 then investors will believe them since it would be almost halfway into Q4 when they share that info.