TSLA Market Action: 2018 Investor Roundtable

[JBRR]

JPMorgan cuts Tesla target to $195 per share

Ryan Brinkman, analyst from JPMorgan Chase, wrote to clients that Tesla Inc.'s declared pursuit for funding aimed at taking itself private didn't get as far as was anticipated, according to media reports published on Monday, which reveal the price target was slashed to $195 per share from $308, still at an underweight rating.

He is said to acknowledge that the electric car manufacturer is indeed exploring options for a buyout. However, the process seems to be "much less developed" than what has been presumed, according to the note, which adds the valuation would be calculated only from fundamental factors. The target was lifted to $308 from $195 after founder and chief executive Elon Musk came out with an initiative to take the company out of the stock market while intending to keep most of the existing shareholders.

 

[dondy]

Probably more, much more.

Solar City buyout timeline:

• 2016/06/21: merger offer
• 2016/10/12: voting date for 2016/11/18 was announced
• 2016/11/18: shareholder vote that approved the merger

I.e. it took 5 months to get a shareholder vote.

Dell buyout timeline:

• 2013/02/06: Dell buyout offer
• 2013/09/12: Shareholder approval vote
• 2013/10/31: Dell gets delisted and goes private

For Tesla the official buyout offer is enough to squeeeze the biggest short squeeeeezzee ever seen on ws

Dell buyout was blocked by some big investor "activist" who held more than 10% of stock. (he damaged quite a few of other companies, ebay-paypal being one of them).
I don't know details about Solar City but I would expect they had accounting differences.
What is interesting is meager speed of Solar City integration into Tesla "narrative". Clearly it wasn't in Musk visor.

 

[KarenRei]

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 ...

That is in my sig (and has been there for weeks) because I've gotten sick and tired of going in circles debating the issue. And will not do so again. If you don't agree, ignore it.

 

[Fact Checking]

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.

Agreed, but it's not just the narrative that will change, Q3 profitability will IMO also activate a lot of 'slow money' that was afraid to invest into Tesla so far. A quarterly report showing profitability is a good starting point for a mid level money manager who works in a conservative fiscal environment but has some investment leeway to start investing into Tesla, especially if the buyout is still live by then which adds a $420 arbitrage trade component to it as well.

OTOH currently you have to be a big, independent fish with iron balls will to invest into a company that almost everyone says can never be profitable and which hasn't had a single profitable year in its history.

So I believe if Q3 profitability and positive cash flow indeed happens and isn't just marginal, it could activate a lot of buying power.

 

[Fact Checking]

I've gotten sick and tired of going in circles debating the issue.

So:

• We don't have to agree about the probabilities, but your statement assigns a zero percent chance for an above-$420 short squeeze to occur by calling it a "figment of your imagination", which is an obviously false statement you are spamming the forum with ...
• You are also passive-aggressively attacking/insulting everyone who disagrees with your statement by calling their opinion a "figment of your imagination".

That false statement and implied attack/insult is what I replied to - you obviously have the right to disagree about the probabilities. I.e. I'm not asking you to agree with me, I'm asking you to not attack contrary views in a signature with no real way to counter them and with an unwillingness of you to even discuss it.

If you are not willing to discuss it or fix the signature to be a truthful statement then please don't spam it, it's disruptive.

 

[Fact Checking]

JPMorgan cuts Tesla target to $195 per share

Ryan Brinkman, analyst from JPMorgan Chase, wrote to clients that Tesla Inc.'s declared pursuit for funding aimed at taking itself private didn't get as far as was anticipated, according to media reports published on Monday, which reveal the price target was slashed to $195 per share from $308, still at an underweight rating.

He is said to acknowledge that the electric car manufacturer is indeed exploring options for a buyout. However, the process seems to be "much less developed" than what has been presumed, according to the note, which adds the valuation would be calculated only from fundamental factors. The target was lifted to $308 from $195 after founder and chief executive Elon Musk came out with an initiative to take the company out of the stock market while intending to keep most of the existing shareholders.

Ryan Brinkman is the same analyst who cut TSLA to $195 back in April:

Sell Tesla shares because BMW, Audi competition is coming: JP Morgan

His arguments back in April were real gems:

• "J.P. Morgan reaffirms its underweight rating on Tesla shares, citing the electric car pipelines from German luxury automakers."
• "When similarly priced high-end long-range electric vehicles become available from prestigious brands with strong reputations for both service and build quality, we believe this could represent a meaningful headwind for Tesla," the firm's analyst writes.

The only news since April we were getting from German carmakers is that:

• EV car-making is hard and takes a lot of time (Porsche),
• that BMW is building a new factory that will build both ICE and EV power-train cars (because EV cars burdened by ICE legacies is what customers really want) which might go online sometime in the early 2020s,
• that production lines had to be stopped and workers sent home due to 'non emissions compliant' (read: customer-poisoning) models (Volkswagen),
• that their existing EVs have a bit more cadmium content than legal in the EU (Volkswagen),
  
• and that Audi's CEO is overseeing the introduction of their new low volume EV lineup from a prison cell.

So Ryan Brinkman first raised his TSLA target to $305 with little fanfare (below the market price at that time), to be able to downgrade Tesla to $195 again, within the space of a few short months. At the same time he also has General Motors and Ford with 'buy' ratings.

I can really see why Elon doesn't want Tesla to be part of the Wall Street farce anymore.

 

[KarenRei]

So:

• We don't have to agree about the probabilities, but your statement assigns a zero percent chance for an above-$420 short squeeze to occur by calling it a "figment of your imagination", which is an obviously false statement you are spamming the forum with ...
• You are also passive-aggressively attacking/insulting everyone who disagrees with your statement by calling their opinion a "figment of your imagination".

That false statement and implied attack/insult is what I replied to - you obviously have the right to disagree about the probabilities. I.e. I'm not asking you to agree with me, I'm asking you to not attack contrary views in a signature with no real way to counter them and with an unwillingness of you to even discuss it.

If you are not willing to discuss it or fix the signature to be a truthful statement then please don't spam it, it's disruptive.

There is nothing to "fix". I've argued it until the cows come home in the past, and - to repeat - will not do so again. I'm allowed to express my viewpoint in my sig. You're the one who's taking a sig and trying to erupt it into a brand new argument that's been rehashed to death a thousand times. As if someone had a sig "Model S is much better than Model 3", and you interrupted an unrelated discussion to complain about how you think their sig is wrong and Model 3 was clearly superior.

Sorry, but I'm not going to play that. No matter how many times you try to make it happen. I'm expressing my views. And I'm not going to spend another day of my life debating them - having spent enough doing so already. End of story. Sorry that you came here wanting a fight and didn't get one.

All further posts on this topic will go without reply.

 

[Mike117]

Ich am afraid of Elon ... I really hope He thought out well that plan to hi private for 420$.

Btw, is there any legal or disclosure reason why the PIF is not buying more stake at 300$ instead of 420$???

 

[Cosmacelf]

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.

Personally I see the Lucid news as a negotiating tactic on the Saudis part. It never hurts to show that you have options when it comes to negotiating prices.

 

[Fact Checking]

I'm allowed to express my viewpoint in my sig.

While I'm not setting moderation policies here, signatures are usually short, neutral, funny or self-describing attributes that personalize and improve content by adding color, without disrupting discussions - a lexical extension to the user avatar space.

They are usually not intended to give a soapbox to hotly debated viewpoints - you can use the regular forum message space to make such arguments about future price action, and be prepared to defend those viewpoints there.

I.e. you are effectively using your signature as an out of band communication medium while refusing to even discuss the validity of your claims and the implied attacks on those who disagree with you...

I.e. you are in my opinion (ab-)using your signature as a read-only propaganda platform to spam a longish, two long 40+ words sentences masked as factual statements, which they aren't.

(Anyway, this is somewhat off topic, I'll stop arguing it.)

 

[Driver Dave]

Times is at it again with a “Timeline”

https://www.nytimes.com/2018/08/18/business/elon-musk-tesla-timeline.html

They include everything sensational and leave out Q2 results and other great recent news.

Is this the NYT Business section or TMZ?

 

[Fact Checking]

Personally I see the Lucid news as a negotiating tactic on the Saudis part. It never hurts to show that you have options when it comes to negotiating prices.

Yes, that's how I'm reading it too:

• "You are not the only EV maker on the planet" negotiation signal,
• "We are serious about growth of the EV space" signal.

Both are important signals when you are negotiating a 10+ billion dollars deal.

Also note that the Lucid Motors deal is a term sheet apparently, which can probably still be called off if negotiations with Tesla are successful. So it's basically a card laid on the poker table.

 

[Toolsmack]

what’s the low of the day? My limit order set on Friday at under 287 suddenly feels like it might be high and I could get it cheaper mid morning? What says the magic 8 balls?

 

[W84M3]

Absolutely brutal 2 weeks.

 

[YasB]

So Ryan Brinkman first raised his TSLA target to $305 with little fanfare (below the market price at that time), to be able to downgrade Tesla to $195 again, within the space of a few short months.

He had them at $195 until the going private tweet occured. After that they guessed that there is a 50% chance for the deal to happen and added half of the $200+ upside as weighted price target arriving at $305. Since then they have re-evaluated the chance for the deal to happen (it won't in their opinion) and reverted their price target to the old value. You don't have to agree with the $195 price target or their judgement regarding the privatization deal to see, that their logic is at least self-consistent. Not sure what you are wondering about there ...

Here is some of the reasoning they have given: Sally Shin on Twitter

 

[Yggdrasill]

The Teslas aren't sustainable. This notion that Tesla has green credentials is ludicrous.

Public transport (that Elon Musk is so eager to ridicule) and dense living (that California doesn't exactly excel in, resulting in horrible PT and the biggest carbon foot print on the planet) is infinitely more sustainable than everyone driving a Tesla.

Public transportation isn't sustainable. It currently requires fossil fuels, which will run out. To even entertain the notion of sustainability, we first need to kick our addiciton to oil. And globally, Tesla is the company that's doing the most to make that a reality.

 

[Fact Checking]

The Teslas aren't sustainable. This notion that Tesla has green credentials is ludicrous.

That's a straw man argument that misrepresents the claim, the claim was, exactly:

"Arianna, If Ive learned anything these last few years launching Model X,being in Production and now being in Service as Model 3 is landing, is that in order to advance the world to sustainable energy, our behavior isn’t irrational, it’s almost an operational requirement."​

Tesla EVs are an important step to convert energy production and consumption to sustainable sources: a very large chunk of the planet's carbon footprint comes from vehicles burning fossil fuels and from power plants burning coal and natural gas.

Tesla is working on an all-around sustainable solution to that:

• Tesla solar cell installations to generate electricity for your home,
  
• Tesla PowerWall to store your solar energy during the day,
• A Tesla car to use that electricity

Such a complete, all-around, sustainable solution replaces all carbon polluting sources I mentioned: the gas burning vehicles, the coal and natural gas burning power plants.

Building Tesla cars is key to that strategy of long term sustainability: the high volume of battery cells manufactured for cars helps ramp up the volume for Tesla Energy products that will transform the whole chain to sustainable. Tesla, in their Q2 conference call, estimated that their Energy business division to generate higher revenue in a couple of years than their automotive segment.

The only thing "ludicrous" about Teslas is their launch mode.

 

[Richgoogol]

Ryan Brinkman is the same analyst who cut TSLA to $195 back in April:

Sell Tesla shares because BMW, Audi competition is coming: JP Morgan

His arguments back in April were real gems:

• "J.P. Morgan reaffirms its underweight rating on Tesla shares, citing the electric car pipelines from German luxury automakers."
• "When similarly priced high-end long-range electric vehicles become available from prestigious brands with strong reputations for both service and build quality, we believe this could represent a meaningful headwind for Tesla," the firm's analyst writes.

The only news since April we were getting from German carmakers is that:

• EV car-making is hard and takes a lot of time (Porsche),
• that BMW is building a new factory that will build both ICE and EV power-train cars (because EV cars burdened by ICE legacies is what customers really want) which might go online sometime in the early 2020s,
• that production lines had to be stopped and workers sent home due to 'non emissions compliant' (read: customer-poisoning) models (Volkswagen),
• that their existing EVs have a bit more cadmium content than legal in the EU (Volkswagen),
  
• and that Audi's CEO is overseeing the introduction of their new low volume EV lineup from a prison cell.

So Ryan Brinkman first raised his TSLA target to $305 with little fanfare (below the market price at that time), to be able to downgrade Tesla to $195 again, within the space of a few short months. At the same time he also has General Motors and Ford with 'buy' ratings.

I can really see why Elon doesn't want Tesla to be part of the Wall Street farce anymore.

And his reasoning is beyond absurd. He states the funding is not secured so the downgrade. Cmon you are telling us that you knew about this all along when you raised the target last time? Did anything fundamental change other than Elon’s tweet? Biatch please

 

[anon]

Times is at it again with a “Timeline”

https://www.nytimes.com/2018/08/18/business/elon-musk-tesla-timeline.html

They include everything sensational and leave out Q2 results and other great recent news.

Is this the NYT Business section or TMZ?

What's most interesting to me about this NYT article is that they state from JULY 2017 that "Musk says his mental health is suffering from the burdens of running his business", yet they presented Friday's article as though something new had happened. Musk talks like this often and has done for years. They have just admitted that they knew that, yet still made out that some new collapse had taken place in Friday's article.

 

[Unpilot]

Pre-market look pretty ...um...downsidey!

When ever pre-mrket is up...I think yes finally...then it seems to drop thru the day.
Maybe today will follow that rule...in inverse.