TSLA Market Action: 2018 Investor Roundtable

[KarenRei]

What's going on TSLA -2% on pre market ?

Called this last night. Glad I've still got a bit of dry powder

 

[sundaymorning]

What's going on TSLA -2% on pre market ?

During the previous earnings rollercoaster we bottomed at $294 before bouncing like a cat, let’s see if we can do that again.

 

[KarenRei]

Too bad the Q3 report is so far away :Þ

 

[loky]

I read really good posts about the possible organization of private Tesla on this forum. Maybe I overlooked an important question for small retail investors:
What could be the lower limit of the shares to be able to participate in private Tesla, if any?

 

[Fact Checking]

Too bad the Q3 report is so far away :Þ

There's ~10 weeks left to the Q3 report, but there's only 6 weeks until the Q3 production/delivery report, which I believe will define TSLA sentiment for the remaining 4 weeks after that.

Some price action wildcards:

• There might also be an announcement of a 6k production week at the beginning of September, in two weeks or so.
• There might be announcement of a week of shutdown to upgrade for higher rates. My guess for the shutdown (if any) is end of September - this would allow lower end of Q3 inventory levels and improve Q3 cash flow.
• There might be a release of the V9 AutoPilot software sometime in September. Could be delayed though, and it's probably too late to have material effects on Q3 numbers.

 

[LordAstinus]

There's ~10 weeks left to the Q3 report, but there's only 6 weeks until the Q3 production/delivery report, which I believe will define TSLA sentiment for the remaining 4 weeks after that.

Some price action wildcards:

• There might also be an announcement of a 6k production week at the beginning of September, in two weeks or so.
• There might be announcement of a week of shutdown to upgrade for higher rates. My guess for the shutdown (if any) is end of September - this would allow lower end of Q3 inventory levels and improve Q3 cash flow.
• There might be a release of the V9 AutoPilot software sometime in September. Could be delayed though, and it's probably too late to have material effects on Q3 numbers.

Exactly what I think

 

[KarenRei]

I think most people are already expecting Q3 production numbers to be high (if not, they're deluding themselves). The real things people want to see are margins, SG&A, etc and to be able to ask questions about demand and timing in the call.

Don't get me wrong, I fully expect volatility - multiple ups and downs - until then. But I don't expect any sort of breakout until then. The news "Tesla was profitable this quarter" will be a hard pill for the shorts to swallow. Oh, they'll fully go into "it was just a one time thing" mode, as well as bringing out their Greatest Hits collection ("they're lying about the numbers", "demand is disappearing", "competitors will kill Tesla any day" now, etc) - and they'll pare the gains back. But it's going to be a serious blow to their narrative when it comes to the general public and the media.

 

[Ellec]

During the previous earnings rollercoaster we bottomed at $294 before bouncing like a cat, let’s see if we can do that again.

I would ignore share price until Q3 ends.

 

[KarenRei]

I would ignore share price until Q3 ends.

So your advice in "TSLA Market Action" is "Ignore the share price"?

We still want to buy on the lows and sell on the highs. The discussion for now hinges on what sorts of lows and highs to expect in the coming weeks.

 

[KarenRei]

I read really good posts about the possible organization of private Tesla on this forum. Maybe I overlooked an important question for small retail investors:
What could be the lower limit of the shares to be able to participate in private Tesla, if any?

Honestly, this is the last thing people need to be focused on right now.

If TSLAP happens at all, it's going to be well into the future.

 

[Fact Checking]

What's going on TSLA -2% on pre market ?

Market sentiment report:

• NASDAQ futures were cautiously up about +0.5% overnight, with a bit of a pullback
  
• DOW futures are showing steady buying pressure in the European session, which could carry over into the U.S. session
  
• Dollar creeping up stronger - this depresses most U.S. equity prices as an FX accounting identity
  
• TSLA down in pre-market, during the session will most likely still have an overhang of the following negatives from last week:
  • The negative NYT article with Elon was read by more people over the weekend
  • The Elon tweet to Ariane Huffington mentioning bankruptcy as a personal motivation will have an effect
  • Shorts are trying to come up with all sorts of new negatives: negative spin on the Lucid investment of the SPIF, Elon's NYT interview, etc.
  • Elon un-followed Grimes on Twitter ... Explains NYT interview sadness and stress.
    
  • There's still no organized buying pressure visible on TSLA, my speculation is that it could be due to a buying moratorium and/or inability to buy of big Tesla shareholders while negotiating the going-private conversion deal.
• There's TSLA positives as well:
  • Registered Model 3 VINs crossed the 100,000 boundary over the weekend,
  • Saudi PIF is investing into Lucid Motors so they can ramp up to ~10k/year in the following 2-3 years. This should signal to Elon that the Saudis are serious about expanding the EV space.
    
  • Bloomberg Model 3 production tracker is at new production highs of 5,900/week,
  • Karpathy seemed relaxed on Twitter over the weekend, there's no V9 AutoPilot hackathon or firefighting in progress it appears, which signals that the September release of V9 AutoPilot could happen as planned

But as usual, the negatives will probably dominate more in this session, especially early on, as most of the media seems hell bent on magnifying the negatives while downplaying the positives. Pravduh cannot come soon enough to help sort the signal from the noise and the anti-signal.

So based on this so far, with no new events and with no changes to macro I'd expect a break of $300 which will trigger a lot of stops, and maybe a re-test of low $290 levels. Depending on how many people decided to sell over the weekend it could be lower as well.

 

[juanmedina]

Honestly, this is the last thing people need to be focused on right now.

If TSLAP happens at all, it's going to be well into the future.

6 months

 

[dondy]

Huh? That shows him arriving at Belfast 4:25 AM, and leaving at 10:45 the same day. Are we to believe that Musk had a secret Irish vacation between 4:25 AM and 10:45 AM? That's called a "stopover". Why did they need a stopover? I don't know, why not ask the pilot? But it clearly wasn't some sort of vacation, like they're trying to make it sound.

There is no need to ask his pilots.
There are very few types of plains capable to reach directly USA (especially western coast) from Spain. Flight time difference with Ireland is more than one hour flight. (or 15%).
Whenever possible flight companies always choose "the polar root".

 

[KarenRei]

Saudi PIF is investing into Lucid Motors so they can ramp up to ~10k/year in the following 2-3 years. This should signal to Elon that the Saudis are serious about expanding the EV space.

This is such a panglossian view. I guarantee you, the market isn't looking at the PIF deal that way; only the most hardcore Tesla supporters will. They broader market will see this as the final nail in the coffin of Tesla actually doing a deal with PIF: PIF funding a competitor.

 

[Fact Checking]

I think most people are already expecting Q3 production numbers to be high (if not, they're deluding themselves). The real things people want to see are margins, SG&A, etc and to be able to ask questions about demand and timing in the call.

If so then there might be a negative surprise as well: Tesla guided production of 50-55k for Q3, which might be due to the Panasonic bottleneck at the Gigafactory. We don't know how fast Panasonic will be able to ramp up to 35 GW/year production capacity, but I'd guess it will take months - maybe the rest of the year.

I.e. if people expect 60k production for Q3 they might be disappointed.

 

[lklundin]

The news "Tesla was profitable this quarter" will be a hard pill for the shorts to swallow. Oh, they'll fully go into "it was just a one time thing" mode

The most efficient FUD has an element of truth to it. So I fully expect the Q3 delivery numbers to be countered with:
"Yes, but that was only because of the stockpiling of production from Q2, done deliberately for the purpose of showing a single quarter with a profit, which will be non-repeatable.".

To partially counter this, Tesla could (in addition to stating their quarterly delivery numbers), also state their net carryover of yet-to-be-delivered production, i.e. the number of cars produced but not delivered within the current quarter minus that same number for the previous quarter - if they want to talk about non-delivered production at all.

 

[KarenRei]

If so then there might be a negative surprise as well: Tesla guided production of 50-55k for Q3, which might be due to the Panasonic bottleneck at the Gigafactory. We don't know how fast Panasonic will be able to ramp up to 35 GW/year production capacity, but I'd guess it will take months - maybe the rest of the year.

I.e. if people expect 60k production for Q3 they might be disappointed.

*GWh

And 50-55k in Q3 is an average of 4k/wk. They're doing nearly 6k/wk pretty consistently now, with reports that they could scale to 8 relatively easily with relatively minimal capital investment. We're already over that 4k/wk, despite having production early in the quarter be notably lower.

 

[lklundin]

This is such a panglossian view. I guarantee you, the market isn't looking at the PIF deal that way; only the most hardcore Tesla supporters will. They broader market will see this as the final nail in the coffin of Tesla actually doing a deal with PIF: PIF funding a competitor.

I am certainly biased, but I disagree. I can easily see the Saudis hedging their oil by investing in both a BEV start-up and (the only) one well into mass-production. I guess time will tell.

 

[Yggdrasill]

60k Model 3 in Q3 only requires 19.2 GWh/year annualized production rate. And if Tesla predicted a battery cell shortfall even two months ago, they would likely have introduced the SR. I don't think cell production is a very hard limitation *currently*, though it may become one in Q4 or Q1.

 

[Fact Checking]

Your notional "well over the $TSLA buyout price" short squeeze is a figment of your imagination. Any large squeezes, if they happen at all, will come from the company's fundamentals, and if they're to above the buyout price, the buyout price must rise.

You are offering this as a statement of fact, while I don't think it's a fact, at all - it's a possibility, but it's not the only possibility of price action during a potential future short squeeze, at all.

Counter arguments:

• You are right that the buyout price must rise if a short squeeze breaches $420 significantly - but this does not help the shorts that already liquidated at unfavorable prices, it in fact magnifies any short squeeze, because it increases future expected buyout prices, i.e. reduces the pool of share owners willing to sell at a given price level.
• This could also be self-fulfilling to a certain degree: during the short squeeze people will start expecting a higher buyout price, which magnifies the short squeeze.
• Tesla and the buyout consortium might agree about a price range in advance, and announce an increase of the buyout price as the price increases. For example they might agree about a price range of $420-$520 and about a protocol to announce increases to the buyout price, contingent on price levels.
• If reports that many big shorts were already at around 300% leverage at $360 price levels are true, and if their entry price averages to $270, then at $420 they will already be at around 500% leverage, which is very close to leverage levels where lenders will be pulling shares due to counter-party insolvency risk. I.e. if the short squeeze is leverage triggered and disorderly, then it is going to be a large temporary spike like the VW squeeze where the shorts were most likely bought in by their banks, and won't affect long term price levels and the buyout price won't have to be raised by nearly as much as the maximum of the spike.

Note that once a big short squeeze triggers with a disorderly process, the magnitude of the spike doesn't really depend on fundamentals.

Of course at $300 price levels and below it's premature to talk about any short squeezes at $400+ levels ...