TSLA Market Action: 2018 Investor Roundtable

[Zhelko Dimic]

Hmmm, Twitter shorts are gloating about the ER. Maybe I won't be trimming any calls tomorrow.

View attachment 322039

Kinda agree, but we at TMC are often a lot more informed than the general investment population, so we overestimate how much is known. Happened to me few times. However, last few weeks have been so negative, I can't see sentiment go down any further.
If it's not clear, I'm flip-flopping here

 

[tinm]

One of the stupidest quotes ever from that video.

“Musk is first and foremost a salesman”.

What the hell? He is one of the most pre-eminent engineers/visionaries the world has ever seen.

How can anyone be so clueless?

Once in a while a great engineer is also a great visionary and is also a great salesperson. It happens. Across the whole history of technology appear many such folks. I agree with you that the characterization that Musk is first and foremost a salesman is not accurate, but he *is* the chief salesman for Tesla and SpaceX and Boring and the rest. I'm not sure he's a *great* salesman, but he's pretty good. His weakness is not caring enough about follow-through and communication, as has been expounded upon relentlessly for years in TMC so I won't go there now. I think if he made follow-through and communication a priority, and disseminated those values throughout the company, he might turn into a great salesman, but I doubt it'll happen. Dude wants to go to Mars.

 

[SPadival]

So I am posting the google cache of the mysteriously deleted blog post from Orbital Insights here.

Mystery solved. The fund manager of the fund that owns Orbital Research is a known Tesla short.

Shortie own goal

Planet and Orbital are both Lux family co's The orbital insight analysis actually came from my prodding them last week to look at the address. Their analyst thought it was nothing notable I raised that M3 did not exist year prior But they thought it was just SOP

Josh Wolfe on Twitter

Josh Wolfe on Twitter

The blog post is back up again
Don’t Panic About the Thousands of Teslas Parked in a California Field - Orbital Insight

 

[Papafox]

Here's my thought about the ER and how the shorts and longs will interact.
As we approached the SolarCity vote in fall of 2016, there was a great deal of pressure from shorts on TSLA stock, but once the vote went heavily in favor of acquiring SolarCity, the ambiguity of the acquisition disappeared, and the SP quickly began to bounce back. Once longs lose their dread and feeling of uncertainty, and see a clear path to a stronger and more profitable Tesla ahead, they buy and when the dread is gone, the shorts lose their ability to steer the SP.

Today, 61% of TSLA selling was by shorts (I know, I know, the number doesn't indicate if there was any increase in short interest and there's double-counting, etc.) but even with the high effort of shorts to manipulate, they failed miserably because with good macros, good news about Panasonic, and a price below $300, there were enough longs buying to completely thwart the shorts. That's really my point. When the longs are buying and confident, the shorts cannot control the stock price. The longs do.

Will Tesla remove the dread from longs on Wednesday? I sure hope so, but I don't know. Promises and projections won't do it. What Elon needs to do is to say something to the effect that Tesla is now cash-flow positive as of the past two weeks (if it is) and that it will only become more cash-flow positive as the quarter and the year proceed, and here's why. There also has to be some evidence that gross margins for Model 3 are going to meet or exceed expectations. If cash-flow, production ramp, and gross margins for M3 are satisfactorily addressed, then it is off to the races for the longs. If not, shorts will do everything in their power to exploit any ambiguity. If Tesla has proof that the descent is over and the climb has begun, they need to carefully and convincingly lay it out during the CC. Wouldn't miss the call for the world.

 

[sundaymorning]

Oldie, but speaks of the character:
Einhorn, Greenlight fined for UK market abuse

Shorts are crooks.

 

[Unpilot]

What time is the CC?

 

[skitown]

What time is the CC?

2:30 pacific time

 

[sundaymorning]

In Chapter 11 you have to buy the bonds, not the shares.

Didn’t the government bailout GM, how did you get your hands on the bonds?

 

[MikeC]

(coolness of product) ≠ (excess of stock value over stock price)

I think you'd be hard-pressed to find anyone else who has driven a Tesla for 3 years who thinks it's a good idea to bet against the company. If nothing else, I'm surprised that he would patronize a company he's making a big bet against, simply out of principal.

 

[Unpilot]

2:30 pacific time

Thanks!

 

[skybluecgreen]

This is well-thought out and I think very possible. I have noticed both of the things that you pointed out - Less FUD in the last week, and definitely optimistic consensus estimates compared with the reasonable estimates we have seen here (see the thread from @luvb2b). The same thought occurred to me, that they are setting up expectations for Q2 that Tesla is very likely to miss pretty badly on. The miss will be very nicely aligned with the short thesis on increasing cash burn, poor model 3 margins, extremely desperate measures to try to ramp production to 5,000. This will spoon-feed anyone who might want to use all of this to argue that Tesla is absolutely doomed and headed for a real liquidity crisis, especially since they could struggle to raise capital given their poor credit rating from Moody's. It also spoon-feeds the idea that Tesla continually misses guidance, and will continue to do so moving forward. It's possible that these trade tariffs could hit Tesla enough to affect Q3 profitability, and if Elon has to walk back his guidance there, look out below. It would be one thing if there was something that we could point to that could positively surprise the market to offset this stuff, but what would it possibly be? Production is already pretty understood to be in the 4,000 - 5,000 weekly range for the most part. Projecting for 6,000 next month is not likely to have much effect IMO because it is guidance, not execution. Maybe they have a higher than expected take rate on the performance 3? That will show up in Q3 and Q4 financial guidance, so if they guide down for those quarters, so what if performance 3 is higher than they expected. Great news regarding the China GF financing? That would be helpful since it is a big financial uncertainty right now. However, I think the market is really looking for execution from Tesla right now.

All of this is to say, I'm leaning towards your forecast. I will probably trim some calls before close tomorrow, depending upon how the day goes. I'd love to hear the opposing viewpoint, that TSLA is likely to climb after the ER. Who wants to tackle that?

I don't know about a likelihood but I can see a scenario where the SP rises Thursday. I don't think it will be on any kind of a positive surprise from earnings or the call. I think Tesla pretty much never surprises on earnings. Generally they trim expectations slightly. And I think between the shareholder meeting, the 5k end of quarter triumph and the China announcement, Elon pushed out all the positive surprises already, presuming they would trigger the squeeze.

I agree the losses will be more than street expectations and the media will be in a frenzy over it. I also agree the shorts have saved up ammo to manipulate the price lower as best they can. So all in all it doesn't sound good but my hope is that institutional buyers, who have been noticebly absent lately, have been waiting on the sidelines to take advantage of the earnings weakness to accumulate shares.

The SP really just boils down to buyers vs sellers I am hoping that Institutions have been waiting until Thursday to time their buying on presumed weakness. If the price drops they could support it and if the support comes in and the price rises they may still have more more to buy which they will have to do at higher prices.

 

[bdy0627]

I think this idea that the first reaction will be wrong is likely.

 

[trils0n]

My gut says tomorrow is going to be brutal. Would not want to be holding options or using margin.

 

[UnknownSoldier]

My gut says tomorrow is going to be brutal. Would not want to be holding options or using margin.

A lot of people are holding options on this one. Should be interesting to see how it shakes out.

 

[Jayjs20]

My gut says tomorrow is going to be brutal. Would not want to be holding options or using margin.

1) Selling into weakness is stupid
2) Someone hold me

 

[schonelucht]

Quickly improving margins, combined with stable and modest growth in SG&A, will be favorable IMO.

What if they don’t? Is there a level of gross margin for Q2 that’s too low for comfort for you? What would it be? And what are the consequences?

 

[glen thomson]

i have a feeling that even if the numbers are bad, it may go back up during the conference call because elon will show extreme confidence in where Tesla is at and profitability in 3rd and 4th quarter. But at the same time people have been some what losing confidence in what he says. This feels like one of the most tense waits for a conference call, its gonna be a big one

 

[phil0909]

I think you'd be hard-pressed to find anyone else who has driven a Tesla for 3 years who thinks it's a good idea to bet against the company. If nothing else, I'm surprised that he would patronize a company he's making a big bet against, simply out of principal.

Perhaps, but if so, it's because those people fail to grasp the inequality I posted above.

Tesla shares are worth $x in some timeframe. If the market prices shares at a level greater than $x, a short can be profitable. Only a simpleton could believe that companies with good products can never be overpriced in the stock market.

Whether Tesla is underpriced or overpriced today, well, that's the Million Dollar Question, now isn't it? Unfortunately it's a lot harder to answer than "product good, stock undervalued". Unless you're Tarzan

 

[ZachShahan]

I believe that changed a couple/few years ago when Elon did his big talk in Norway? in front of owners.

Original plan was to show other OEMs how to make compelling EVs and Tesla to remain a smaller player in the industry, but it didn’t work like Elon imagined it should. It was at that talk where his mind set changed and he said something to the effect, since they won’t willingly follow by example, Tesla will make them follow or put them out of business.

Since that talk, Elon’s been laying the foundation to kill every OEM in his path. And now he’s included the Energy sector and related industries. He changed from I’ll hang at Tesla until Model 3 to I’m going to build a family empire and complete ecosystem.

Totally agree. Good memory and insight, imho.

 

[ZachShahan]

Aftermarket today:

Einhorn Greenlight Fund shorted Tesla and endured massive losses to its portfolio. A letter sent out to its shareholder indicated it wants to end losses.

Billionaire investor David Einhorn incurred double digit loses -18.3% the first 6 months of 2018, and “was far worse than we ever expected.” Quoted Reuters. Eihnorn acknowledged making mistakes, and wrote extensively to shareholders defending his short position in Tesla.

According to the article on h E*TRADE account, shareholders have pulled millions from his fund and appears to be annoyed by his decisions.

I hope Tesla squeezes and he losses 50% of his shareholders money.

hmm, saw this coming, but figured he got out of his insane approach by now.

Greenlight Capital Continues To Tumble (6% Loss In February), Betting Against Tesla & Amazon Not Helping | CleanTechnica

David Einhorn Continuing To Short Tesla Stock, Says Company Is Not Adequately Capitalized | CleanTechnica

I'm not sure how frequently, but he's been a talking head on TV bashing Tesla, so will at least be nice if he keeps his mouth shut there now.