TSLA Market Action: 2018 Investor Roundtable

[jbcarioca]

This is basically my investment thesis on Tesla.

Let's face it: the company's a mess. Internal communications are completely borked; the left hand never knows what the right hand is doing. Their IT department is extremely disorganized to the point where it's seriously damaging software quality. Most of the software on the car is pirated because they never bothered to check the terms of the open-source licenses. Their legal department is beyond terrible, managing to lose a libel case in "libel paradise" England. They aren't even able to keep track of motor vehicle registration rules in all 50 states. HR has been so badly mismanaged that bad actors are placing themselves into management and firing the decent people (yes, I think we now have enough documentation to be sure that this is happening in some departments) -- while this is pretty normal for any large corporation, it's still bad. Management seems to be so disorganized that they can't figure out where they need service centers (despite people yelling at them about it for five years). Delivery logistics seems to be quite beyond them, and customers have even been given cars of the wrong color.

But where's the competition? There isn't any. I follow all of it closely, and everyone else is making *bigger* mistakes.

I wish I could disagree. Based on my current experience taking delivery on my new P3D+ I must agree. They lost my tradein, only finding out when I sent them the original tradein documents, miscalculated taxes for my area, and missed a number of other points. Every single person seems to be desperately trying to do a good job but they're all confused, not very well trained and swamped with work. That is not unusual for operations that have ramped up so very quickly but...we expect better from Tesla. I remain optimistic that all this will be sorted quite rapidly but, from Norway to San Francisco massive overloading is not engendering good feelings. In retrospect I'm not at all certain that layoffs were such a good idea.

 

[Fact Checking]

But where's the competition? There isn't any. I follow all of it closely, and everyone else is making *bigger* mistakes.

Also let's not forget this Dan Neil (Wall Street Journal) interview:

Behind The Wheel of the Tesla Model 3 Performance Vehicle

"This is a fantastic car really way ahead of its time, but how long before other car makers catch up? My estimate, just driving this car, I think Tesla has at least a 5-year head start on the propulsion side: that is the batteries and the high power and high efficiency electric motors, and most of all, the software and packaging of their power electronics.

On those scores [Tesla] really does have a competitive advantage that will last for the next 5 years, I think."
​

Powerful vote of confidence from Dan Neil, who got a Pulitzer for his auto reviews.

 

[The Blue Owl]

I generally stay away from short term predictions, but this time I’m exposed with some Sep 21 $345 calls and I’d like to hear from others on this board.

I was betting on the deal happening and on some news confirming it during the next week or two. The market obviously didn’t price in a deal, or else the price wouldn’t be where it is. If the Friday close at $322 reflects the equilibrium between the deal believers and the skeptics, now that the deal is dead, I struggle to see how the stock price can break to the upside. Elon’s decision will surely be painted as a retreat caused by an inability to find buyers. CNBC will run stories all day with guests reaffirming that he should find a COO and reiterating the last couple of months of Musk’s tweets together with the NYT “interview” to push the idea that he is exhausted or unstable and approaching a breaking point. The WSJ will surely be along with their take, as will the Times.

As a result of all this, my gut is telling me that it will gap down on open, around $300 or so, and it will swiftly drop lower from there to possibly break under $280, all this in the first 30 minutes. I have no idea what will happen after, but I am inclined to believe the stock will close down for the day.

My short term prediction skills are nothing to write home about, usually, which is why I’m asking. I’m only interested in the Monday action, and possibly the rest of the week. Purely short term only. For instance, projected Q3 production numbers will not be on traders’ mind, I would think, but feel free to disagree (just make sure you explain your thinking, please).

Thoughts?

 

[Krugerrand]

Types of Market Manipulation
Market manipulation comes in many shapes and sizes. The following are a few examples of different types of market manipulation.

• Churning - An attempt by a stock broker to increase activity in a client's account to boost commissions by buying and selling orders at the same price. This activity is intended to drive up the price and attract other investors.
• Ramping - Creating activity or rumors intended to raise the price of a stock.
• Wash trading - Generating activity to push up the stock price by selling and re-purchasing the same security.
• Bear raiding - An attempt by a broker to short sell a security and drive the price down, allowing it to be bought back at a lower price and thus make a profit on the difference.
• Cornering - When enough of a certain stock, commodity, or other asset is purchased in order gain control and establish the price for it.

Knock it off already. It wasn’t a rumor or creativity to increse stock price. And if you keep presenting lies on this forum you’ll be banned.

He actually had funding and still has funding to take Tesla private. He even has (still) the support of shareholders to take Tesla private. He chose not to because shareholders asked him not to based on the difficulty, complexity and uncertainty of creating a special fund particularly for retail investors and based on the fact that some weren’t going to be able to follow.

I know it pains you to accept that Elon and Tesla have this kind of broad and full support regardless what he/they decide to do because you’ve never been the kind of person others trust implicitly, especially with their money.

Feel free to go back to SA where deceit about Elon and Tesla is a requirement for being part of the club.

 

[Krugerrand]

If we compare the situuation today with the situation just before The Tweet, I ‘d say the net effect would be that more TSLA shares are now owned by the ‘you can pry my TSLA from my cold dead hands’ crowd.
I would guess that the people here dat added to their position will keep their shares indefinitely (I added too, though I didn’t post that here), only a small portion seems to have bought to keep the shares untill the 420 dollar buyout.
Net effect to mee seems that strong longs have more TSLA, weak longs will buy back what they sold, causing upward price pressure.

I bought too and so did a bunch of friends who had been procrastinating but didn’t want to risk missing the chance should Tesla go private. They’ll hold for years.

 

[neroden]

I wish I could disagree. Based on my current experience taking delivery on my new P3D+ I must agree. They lost my tradein, only finding out when I sent them the original tradein documents, miscalculated taxes for my area, and missed a number of other points. Every single person seems to be desperately trying to do a good job but they're all confused, not very well trained and swamped with work.

That's the underlying theme from the last five years. Tesla needs better managers, better training, and above all, better secretaries.

That is not unusual for operations that have ramped up so very quickly

True.

but...we expect better from Tesla.

Really? I'd hoped for better, but I no longer expect better.

I remain optimistic that all this will be sorted quite rapidly

I don't. I am now quite sure it won't be sorted out for *years*. The communications and organizational problems which I reported back in 2013 have not been addressed at all and have gotten worse. And now they've multiplied those problems by 40,000 employees, making them harder to solve; they have no internal role model for how to run things. I doubt there's a single department in the company which is anything other than a chaotic mess; maybe hardware engineering. (Edit: Or accounting, they seem to be on top of things.)

This is why my investment thesis for Tesla now is basically "Well, who else is delivering 400,000 electric cars per year? Anyone? Bueller?"

but, from Norway to San Francisco massive overloading is not engendering good feelings. In retrospect I'm not at all certain that layoffs were such a good idea.

 

[Ratanpara]

I say stock trades higher on Monday on news ,staying public. Some institutional shareholders probably sold their stock based on notion they are not allow to hold stock on private company.

 

[winfield100]

So, I was previously working in M&A

@priscila
Anton W, is that you? slumming from SA?, QTR?, NYC? I'll bet your avatar looks "devine" in drag
referencing yours and other shorts from SleezA. trolls all

 

[ggr]

Please provide link to the above captioned quote.

He doesn't need to, I don't think, because the link was posted about 15 times in ten minutes, and he refers to it as "the ir letter", pointing you to ir.tesla.com.

 

[Krugerrand]

You know that there are SEC investigations ongoing and law suits from people that suffer losses due to his lies (tweets). We do not have to discuss that they indeed were lies. "only dependent on shareholder vote..." it was all a huge lie on some drug that he had in his system unfortunately.

Step away from the keyboard and the Internet, you’ve been tricked by a French guy.

 

[neroden]

So I lost about 30% of my life's savings because my J20 400 LEAPs went off a cliff in the span of 5 minutes, had to sell and buy DITM leap, all that for nothing? I'm a tad annoyed. Now those J20 400 LEAPs are going to skyrocket and if I want to get back into them, it's a day's wait.

I'm pretty ok with losing money because the stock price goes down, because at least it's anchored to the stock price. But losing money for reasons other than the SP does annoy me, a lot.

Then stay out of options!!!

 

[dondy]

Simple reminder: to declare privatization successful buyer has to accumulate 90% of shares. So obviously some big institutional investors blocked the deal. I believe it would very fair to know the name of these "heroes". I wonder if they understand what they did actually.


If I am reading my tea leaves correctly Tesla's stock price will float in the same 320 range. Probably even till Q3 reports.

And I have a very itchy hunch that somewhere during next 4-6 months Tesla will split into Energy (solar+batteries) and auto (cars+autopilot) companies. Interesting.

 

[AndyH]

I say stock trades higher on Monday on news ,staying public. Some institutional shareholders probably sold their stock based on notion they are not allow to hold stock on private company.

Wouldn't institutional shareholders wait for the 420$ buyout instead of selling early? I'm just wondering.

 

[Krugerrand]

I guess: S&P here we come!

 

[Causalien]

Or you will sue him? Are you any better than shorts?

Heh. No, I am no better than shorts now.

If there's going to be free $50 per share, I am going to join. My belief of the cause and managing of the bank roll are two different thing. The reasoning is simple. If you join, you get to extract money from other longs who doesn't join. Game theory says you must join.

However, shareholders will need to prove damage, if stock stays above, than probably not much case to go on.

 

[dondy]

The other thing he hasn't considered is that posting that information publicly is a good way to make future job searches much more difficult. What company wants to hire someone that, years later, will do that to a former employer?

It is somethingawful. It become less popular during last years but it was used to be the site of controllable "exposure" and "leaks".
I doubt this guy will be exposed, or rebutted.

 

[Krugerrand]

Can’t say I’m looking forward to Goldman and JP getting back on the SP analysis bandwagon.

 

[ggr]

Mod:
Some posts with profitability spreadsheets moved to q2-q4 2018 financial projections
--ggr

 

[Krugerrand]

Every time I try to do a short term trade, it winds up becoming a long term purchase.

Horrors!!!!

 

[neroden]

Very interesting question, I was wondering about that price action mystery too:

• Could be a big player sensing or knowing the end of negotiations without being an insider, figuring a big wave of stock purchases and soaking up liquidity.
• Or it could have been an end of Friday weekly options $320 strike price play, executed in an interesting way.

One thing seems certain: in hindsight my initial speculation that it might have been the 'buyout consortium' was dead wrong!

I think there have been many large buyers with effective limit buy prices around $320 and $300 for over a year. (In order to not show their hand, they would not simply put a "buy 5 million shares at $320 limit" order into the order book, obviously, but I believe that's the economic essence of their behavior.)

I am actually quite sure about this.