Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[Gigapress]

They would. Looks like the "Elon is selling" from last week is pretty much debunked.

Just checked - Drew sold some shares on Thursday, but that was it. Looks to be an options exercise of 10,500 shares.

Here's something else that's been debunked that could have stopped that conversation before it even started:

The notion that selling from Elon has any material effect on the short-term TSLA price after factoring out the correlation with macros.​

​

• We can have 95% confidence that there is a small, transitory, non-zero downward effect that lasts for maybe one day when Elon sells.

• When he sells more than 5% of total trading volume, we have a sample of 5 data points with roughly 7% decline. However the effect appears transitory because in all cases, TSLA reached the same original price level again at some point within the subsequent week or two.

This result may be counterintuitive to a lot of people who want to keep worrying and posting about it. The evidence indicates that this activity is a complete waste of time, except maybe on the options thread where people have real concerns about stock price movements occurring in a matter of a day or two.

This chart shows, for each of the 20 days Elon has sold, the TSLA price change from opening to closing after adjusting for TSLA's beta.

TSLA price % change from open to close on days Elon has sold:
n = 20
Sample Average = -2.3%
Std Dev = 4.8%
95% confidence interval = [-4.4%, -0.2%]
99% confidence interval = [-5.06%, 0.46%]

TSLA price % change from the opening price on the day of the sale to the day 5 trading days after the sale:
n = 20
Sample Average = +0.9%
Std Dev = 9.2%
95% confidence interval = [-3.1%, 4.9%]
99% confidence interval = [-4.4%, 6.2%]


So, historically Elon's sales are associated with an expected average single-day TSLA decline of about 2.3% give or take 2 or 3 percentage points. We don't even have high confidence that the true average effect is less than zero, because 0 is on the edge of the margin of error. TSLA actually gained on 5 of the 20 days in which Elon has sold.

As a matter of fact, when looking at all of Elon's sales, the potential downward bias appears to be transitory. The data shows no evidence of consistent residual impact on the TSLA price a week after the sale, and on average TSLA has gone 0.9% higher after 5 trading days have elapsed.

Spoiler: Raw Data in table

Date	Elon Sale Amount	Total TSLA Volume	Elon % of TSLA Volume	TSLA Open	TSLA Close	TSLA % Change	TSLA Close 5 trading days later	TSLA % Change 5 trading days later	S&P 500 Open	S&P 500 Close	S&P 500 % Change	TSLA Expected % Change Based on Linear Model of S&P 500 Influence	TSLA Deviation from Expected performance
8/9/2022	3,040,228	28,748,230	10.6%	870.88	850	-2.4%	919.69	5.60%	4133.11	4122.47	-0.3%	0.2%	-2.6%
8/8/2022	1,583,879	33,121,762	4.8%	885	871.27	-1.6%	927.96	4.85%	4155.93	4140.06	-0.4%	0.2%	-1.8%
8/5/2022	3,300,000	37,724,301	8.7%	908.01	864.51	-4.8%	900.09	-0.87%	4115.87	4145.19	0.7%	0.2%	-5.0%
4/28/2022	5,230,000	41,649,512	12.6%	899.98	877.51	-2.5%	873.28	-2.97%	4222.58	4287.5	1.5%	3.3%	-5.8%
4/27/2022	345,601	25,652,131	1.3%	898.58	881.51	-1.9%	952.62	6.01%	4186.52	4183.96	-0.1%	0.2%	-2.1%
4/26/2022	4,069,399	45,377,887	9.0%	995.43	876.42	-12.0%	909.25	-8.66%	4278.14	4175.2	-2.4%	-4.7%	-7.2%
12/28/2021	934,090	20,107,971	4.6%	1109.49	1088.47	-1.9%	1149.59	3.61%	4795.49	4786.35	-0.2%	0.2%	-2.1%
12/22/2021	340,564	31,211,359	1.1%	965.66	1008.87	4.5%	1070.34	10.84%	4650.36	4696.56	1.0%	0.2%	4.3%
12/21/2021	934,091	23,839,311	3.9%	916.87	938.53	2.4%	1086.19	18.47%	4594.96	4649.23	1.2%	0.2%	2.2%
12/16/2021	934,091	27,590,480	3.4%	994.5	926.92	-6.8%	1067	7.29%	4719.13	4668.67	-1.1%	0.2%	-7.0%
12/13/2021	934,091	26,198,500	3.6%	1001.09	966.41	-3.5%	899.94	-10.10%	4710.3	4668.97	-0.9%	0.2%	-3.7%
12/9/2021	934,091	19,812,830	4.7%	1060.64	1003.8	-5.4%	926.92	-12.61%	4691	4667.45	-0.5%	0.2%	-5.6%
12/2/2021	934,091	24,371,619	3.8%	1099.06	1084.6	-1.3%	1003.8	-8.67%	4504.73	4577.1	1.6%	3.5%	-4.8%
11/23/2021	934,091	36,171,699	2.6%	1167.51	1109.03	-5.0%	1095	-6.21%	4678.48	4690.7	0.3%	0.2%	-5.2%
11/16/2021	934,091	26,542,359	3.5%	1003.31	1054.73	5.1%	1109.03	10.54%	4679.42	4700.9	0.5%	0.2%	4.9%
11/15/2021	934,091	34,775,648	2.7%	1017.63	1013.39	-0.4%	1156.87	13.68%	4689.3	4682.8	-0.1%	0.2%	-0.6%
11/12/2021	1,200,000	25,573,150	4.7%	1047.5	1033.42	-1.3%	1137.06	8.55%	4655.24	4682.85	0.6%	0.2%	-1.5%
11/11/2021	639,737	22,396,570	2.9%	1102.77	1063.51	-3.6%	1096.38	-0.58%	4659.39	4649.27	-0.2%	0.2%	-3.8%
11/10/2021	500,000	42,802,719	1.2%	1010.41	1067.95	5.7%	1089.01	7.78%	4670.26	4646.71	-0.5%	0.2%	5.5%
11/9/2021	3,088,047	59,105,840	5.2%	1173.6	1023.5	-12.8%	1054.73	-10.13%	4707.25	4685.25	-0.5%	0.2%	-13.0%
11/8/2021	934,091	33,445,719	2.8%	1149.785	1162.94	1.1%	1013.39	-11.86%	4701.48	4701.7	0.0%	0.2%	0.9%

 

[JRP3]

We can have 95% confidence that there is a small, transitory, non-zero downward effect that lasts for maybe one day when Elon sells more than 5% of trading volume, and that's it.

You know very well that it's not just the initial selling but the subsequent news of him selling which affects the price.

 

[JRP3]

Tesla closes China showroom, be ready for demand FUD even though it seems like a smart move to close an underutilized asset.

Tesla closes its first showroom in China in retail strategy shift - sources

Electric vehicle giant Tesla has closed what had been its flagship showroom in China, a move sources described as one aimed at paring retail costs in its second-largest market.

www.reuters.com

 

[Gigapress]

You know very well that it's not just the initial selling but the subsequent news of him selling which affects the price.

Form 4s saying when he sold come out within 3 trading days. I looked at TSLA prices not only on selling days but also 5 days afterward which allows ample time for any news of Elon selling to manifest in the TSLA price. Shockingly enough, it doesn't.

I see lots of theories as to why this should have an effect, but at the end of the day no measurable effect has actually been observed across 20 instances.

in all cases [of Elon selling more than 5% of the trading volume], TSLA reached the same original price level again at some point within the subsequent week or two.

The data shows no evidence of consistent residual impact on the TSLA price a week after the sale, and on average TSLA has gone 0.9% higher after 5 trading days have elapsed.

 

[Paracelsus]

You know very well that it's not just the initial selling but the subsequent news of him selling which affects the price.

Fully agree - we witnessed this when he sold to pay his taxes too.

Although it may not happen as soon as many of us would like to see, I am anxious to find out the effects of the antithesis:

"...................it's not just the initial buy-back but the subsequent news of Both Elon & of Tesla buying-back which affects the price"

 

[hobbes]

You know very well that it's not just the initial selling but the subsequent news of him selling which affects the price.

..not to forget the expectation/fear of Elon (possibly) selling. Market does not like uncertainty.

 

[larmor]

..not to forget the expectation/fear of Elon (possibly) selling. Market does not like uncertainty.

Market also does not like continued positive cash flow, increasing margins, and new factories spooling up. Market does not like certainty.

 

[JRP3]

Form 4s saying when he sold come out within 3 trading days. I looked at TSLA prices not only on selling days but also 5 days afterward which allows ample time for any news of Elon selling to manifest in the TSLA price. Shockingly enough, it doesn't.

I see lots of theories as to why this should have an effect, but at the end of the day no measurable effect has actually been observed across 20 instances.

You assume the price wouldn't have been higher those days without the sales. Elon selling has a longer term depressing effect on the share price as does continued uncertainty over potential future sales.

 

[Knightshade]

They labor under the illusion that their piles of patents offer them some competitive advantage.

Keeping their tailgate steps and entry keypad patents safe is vital to their enterprise value!

/s

FWIW a major reason big old companies hoard mountains of patents (IBM famously had the most new patents every year for decades because they offered $ to employees who got patents- on anything, even things with no immediate/obvious commercial value to anything IBM was currently doing) is because of its value in future litigation (or prevention thereof).

It's fairly common for someone to say "Hey you're infringing our patent, give us $" to such a company, who then goes to their catalog of eleventy-pepsi random patents, and finds 3 the first guy might be infringing on- so they point this out and say how bout we pay you nothing and you sign this saying it's fine for us to use the thing we are using and we won't sue YOU over the 3 things we only bothered to find because you annoyed us?"

None of this is about making their own existing products better necessarily- but it absolutely makes business sense in areas where there's insane #s of patents floating around and it's reasonably easy to infringe unintentionally (or at least come near enough a lawyer might make a case you did and insurance is nice to have).

 

[2daMoon]

You know very well that I THINK it's not just the initial selling but the subsequent news of him selling which affects the price.

FTFY

Otherwise, you would take the time to share your data supporting your opinion as @Gigapress has.

 

[JRP3]

FTFY

No you didn't, you just twisted an obvious fact to "fix" it for yourself.

 

[2daMoon]

No you didn't, you just twisted an obvious fact to "fix" it for yourself.

Please provide measurable data supporting your opinion.

 

[CHGolferJim]

Gawd, when people see those things silently driving around town, and accelerating like a car, that'll be the biggest EV commercial you could ever have.

Is 0-60 in 20 seconds true? Disappointing.

 

[jeewee3000]

Is 0-60 in 20 seconds true? Disappointing.

Fully loaded, though. Not disappointing IMO.

 

[CHGolferJim]

While they haven't booted a company (that I recall), they are notorious for stealing intellectual property (IP).

I have a family friend, very old, who worked at the VP-level for decades in the textile industry, at one of the major players. He has discussed on several occasions how at trade shows his company would observe the Chinese companies going around taking photographs and detailed notes about the products on display from US and EU-based companies. By the time the next trade show rolled around (quarterly or every 6 months), the Chinese competitors would have on display identical products. This was brought to the attention of the WTO, with strong evidence (the Chinese even copied intentionally-placed "defects" that his company had placed into the patterns of the fabric as a test to see if the Chinese were blatantly copying - and the defects were perfectly copied over), and the WTO slow-rolled the complaints that by the time they were addressed, the US-based textile industries had already been decimated.

So, there is precedent to not trust the Chinese, when it comes to being willing to compete on a fair and even playing field. They have shown clearly that "win at all costs" is what they consider within the rules.

Right now, the Chinese have a lot to gain by learning from Tesla and how they build cars. They aren't going to spoil that golden goose, not for a while. But that doesn't mean they are completely trustworthy either.

Billion dollar pharma plants have been copied.

 

[JRP3]

Please provide measurable data supporting your opinion.

TSLA current stock price. Unless you think it's fairly valued considering only macros.

 

[2daMoon]

TSLA current stock price. Unless you think it's fairly valued considering only macros.

This statement debunks the data provided by @Gigapress how, exactly?

 

[Cosmacelf]

New suspension option for Model Y

https://twitter.com/x/status/1587666864997400577

Nice, that was the one thing I didn’t like about the Y.

 

[ZsoZso]

FTFY

Otherwise, you would take the time to share your data supporting your opinion as @Gigapress has.

OK, now compare the effect of the 2020 split with the effect of the 2022 split.
That's hardcore data right there. Now, prove that it was not Elon's Twitter obsession and share dumping that made the huge difference.

 

[Gigapress]

You assume the price wouldn't have been higher those days without the sales.

That assumption is not embedded in the test, which was measuring relative moves, not absolute share price. We have reasonable control group here, which is all the other days Elon didn't sell.

Here's the entire time series of TSLA daily % change I looked at. The average daily TSLA change was -0.1%. Can you point out for us which of these days Elon sold stock on this chart?

If Elon's individual sales have any material effect, then it will show up as a tendency to have a different % change for TSLA on those days compared to the baseline expectation (-0.1%). Or alternatively, if the news of Elon selling has this effect, then it should show up a couple days after the Form 4 confirms the sale occurred.

Elon selling has a longer term depressing effect on the share price as does continued uncertainty over potential future sales.

That could be, but where is your supporting evidence? Personally I haven't thought of any actual way to test whether that's true.

Depending on what evidence you have, the "I think" preface suggested by @2daMoon might be appropriate.