TSLA Market Action: 2018 Investor Roundtable

[Esme Es Mejor]

anyone else notice the after hours spike? Anyone know why? Just a minor spike @7:15

As @Artful Dodger noted, it was just a bounce back from a little dip. The dip seemed to coincide with the “executive exodus” article by Dana Hull that @Wnuk liked to. So the little spike was when investors realized the article was BS.

But that’s just, like, my opinion, man.

 

[sundaymorning]

Are we in concensus that Q3 will be a beat above 50k Model 3 and 24-25k Model SX? Troy’s spreadsheet is currently showing over 46k Model 3s, at the rate of 4,200/week we should easily sail beyond 50k.

I’m feeling nastalgic again, back in 2012 Tesla had 2 quarters of consecutive misses and delays, by Q1, 2013 members on this forum were predicting a beat, which was then confirmed by Elon’s cash flow positive tweet on April 1st... right now I have the same exact feeling as I did in 2013 when Elon tweeted—calm, collective and at peace (despite the FUD).

I couldn’t resist buying back in today with the 5 star safety news. Somehow I have a feeling it was leaked to certain people yesterday, which was why we moved up so hard. At any rate, another reason why I bought back in was because the China Tariff isn’t as nearly as bad as some were predicting, the economy remains strong, and lastly, if Tesla adds to that $2.2 billion, we might blow past the $350s like we did last ER. I wouldn’t want to be left behind with so many positives ahead of us. If we resolve the delivery he’ll issue in Q4, watch out! About 13 days left until numbers are out, let the countdown begin.

 

[Fact Checking]

Something of interest today was the earlier action in the $285 and $290 Oct 5 calls. Lots of contracts were closed during the spike to $305. I find that surprising since even though I am a long-term bear at the moment I expect a nice pop on the Q3 numbers in the first days of October. These folks either see a pull-back before then for a lower buy point or else were just ready to cash out some profits.

I believe you are (genuinely) misinterpreting yesterday's price action in the TSLA options market:

• The Oct 5 calls volume was only 2k contracts, which is 200k shares equivalent with a beta effect of maybe 20k shares - not (nearly) enough to move the stock price.
• The Oct 5 calls were sold by owners of those options - i.e. most probably profit taking by longs, not new calls sold by shorts.
• The real options price action yesterday was in today's (Sep 21) call options: high traffic with 100k volume near-the-money, which is 10M shares-equivalent and a beta of around 1M shares. Enough to move the SP.
• Note that while the PUT options Sep 21 open interest is much (much) higher with ~300k options (30 million shares equivalent), yesterday's volume was much lower than that of CALL options - which further increased the already high PUT/CALL ratio.
• The vast majority of those PUTs are going to expire worthless, nevertheless they still do represent a significant black swan risk for market makers.
• Longs who didn't want to own options to expiry (which is a significant percentage of them usually) took a lot of profits yesterday. Shorts didn't bother selling their pennies options, they are still hoping for a black swan event. The resulting increase in the PUT/CALL ratio created a (most likely artificial) increase in expected downside volatility, which magnified the spike down.
• The price also (most likely accidentally) was just above the daily high and just above $300, which probably hosted a couple of hundred thousand shares worth of stop orders of intraday momentum traders.
• The total effect of these factors was a spike of sell pressure that quickly drove the price from $302 to $298 in that volatile minute of trading, and the sudden drop probably created further momentum shorting by quant traders and perhaps cautionary inventory trimming by market makers who are still exposed to 30M PUT interest and whose inventory management algorithms are probably in super-paranoid mode, especially for the smaller MMs that might be overexposed.
• At around $294 accumulating buyers stepped in and controlled price action for most of the rest of the day.

Summary: such nervousness is an expected property just one day before 30M+ shares worth of short positions expire - regardless of the fact that most are trading for pennies.

The only comparably crowded PUT options open interest is for Jan 18 next year, so after today's options expiry I'd expect Q3 expectations bull price action to take over on Monday.

About 30% of the total ~100 million shares-equivalent short positions in TSLA will expire worthless today, which short positions are most likely not going to be rolled forward, which will create a big improvement in the PUT/CALL ratio, which might attract more quant long interest next week.

(Barring any negative events until then.)

(Not advice.)

 

[MXWing]

We are taking for granted how frieken awesome Teslas are at crashes.

 

[Ludalicious]

Are we in concensus that Q3 will be a beat above 50k Model 3 and 24-25k Model SX? Troy’s spreadsheet is currently showing over 46k Model 3s, at the rate of 4,200/week we should easily sail beyond 50k.

I’m feeling nastalgic again, back in 2013 Tesla had 2 quarters of consecutive misses and delays, by Q1 members on this forum were predicting a beat, which was then confirmed by Elon’s cash flow positive tweet on April 1st... right now I have the same exact feeling as I did in 2013 when Elon tweeted—calm, collective and at peace (despite the FUD).

I couldn’t resist buying back in today with the 5 star safety news. Somehow I have a feeling it was leaked to certain people yesterday, which was why we moved up so hard. At any rate, another reason why I bought back in was because the China Tariff isn’t as nearly as bad as some were predicting, the economy remains strong, and lastly, if Tesla adds to that $2.2 billion, we might blow past the $350s like we did last ER. I wouldn’t want to be left behind with so many positives ahead of us. If we resolve the delivery he’ll issue in Q4, watch out! About 13 days left until numbers are out, let the countdown begin.

Agreed. I moved a bunch of stocks around to Tesla. I have been sitting on the sidelines a long time. This IMO is a turning point. Elons brothers comment during an interview the other day said everything. I ate every word of it since it never came from Elon. But his long arcade business partner. His brother. LOL

 

[Fact Checking]

I couldn’t resist buying back in today with the 5 star safety news. Somehow I have a feeling it was leaked to certain people yesterday, which was why we moved up so hard.

I believe this week's price action was dominated by the fact that about ~30 million shares equivalent short options are going to expire today (!).

The intraday drop yesterday was very likely unrelated to routine regulatory investigation of a workplace injury.

These are massive exposures with a theoretical dollar value of around 10 billion dollars, while the market-maker sweet spot lies a bit over $300, which created a lot of incentives to generate/magnify FUD events (shorts), combined with protective price barrier buying (market makers), and pre-expiry profit taking by long options owners.

 

[Fact Checking]

About 13 days left until numbers are out, let the countdown begin.

Yeah.

Note that those 13 days include two weekends, the market-time left to the Q3 production letter is only 6-7 trading days, so in terms of market action things will IMO happen very fast after today's expiry of ~30 million shares worth of (options-space) short positions...

 

[sundaymorning]

Agreed. I moved a bunch of stocks around to Tesla. I have been sitting on the sidelines a long time. This IMO is a turning point. Elons brothers comment during an interview the other day said everything. I ate every word of it since it never came from Elon. But his long arcade business partner. His brother. LOL

Do you have a link of what he said, can you also help paraphrase?

 

[sundaymorning]

Yeah.

Note that those 13 days include two weekends, the market-time left to the Q3 production letter is only 6-7 trading days, so in terms of market action things will IMO happen very fast after today's expiry of ~30 million shares worth of (options-space) short positions...

Off hand do you know how many shares of calls expired today? If it’s way less than puts/short then I think you might right.

 

[Ludalicious]

Do you have a link of what he said, can you also help paraphrase?

Kimbal Musk: Elon working hard for Tesla shareholders, focus is on delivering the Model 3

 

[Fact Checking]

Are we in concensus that Q3 will be a beat above 50k Model 3 and 24-25k Model SX? Troy’s spreadsheet is currently showing over 46k Model 3s, at the rate of 4,200/week we should easily sail beyond 50k.

Note that production guidance was 50k-55k, so Q3 production in that range is "meeting" expectations, not "beating" expectations.

There is also an incentive for Tesla to not peak-manufacture Model 3 at the end of Q3 (next 9 days), because that only generates extra inventory which consumes cash - much of the last ~6 days of Model 3 production probably cannot be delivered in time, unless they have saved up a few thousand deliveries to nearby owners. (But even then it's pushing it: the lowest ever VIN to delivery latency reported was 6 days IIRC.)

Tesla Model 3 production is also 2170 cell constrained - I.e. they can slow down next week to conserve cash and make up for it in October, without hurting overall production.

So I wouldn't expect a huge beat of guidance - the 52k predicted by Troy is perfect.

The part they could create a Q3 surprise is deliveries: maybe even in the 55k-60k range? That helps cash and generates GAAP income.

 

[Ludalicious]

quote:
"Really going to blow people's minds in the next couple of weeks when people find out just how many model 3s are actually being delivered."

Followed by the worlds biggest SMUCK face ever.

 

[Xpert]

Set a 294 limit buy order for tomorrow.

Good plan, if it dips this would be a great chance to play the Q3 delivery numbers. This explained the selling today, someone knew. My crystal ball says it’ll be green tomorrow by end of day. Perhaps overblown Tsla news have become the norm and investors no longer care. Its gonna be all about Q3 numbers, this should outweight losing a supply chain VP.

 

[Ludalicious]

Looks like a little boy that just seen his very first set of BOOBS after that comment.

 

[loco]

quote:
"Really going to blow people's minds in the next couple of weeks when people find out just how many model 3s are actually being delivered."

Combine that with recent e-mail to employees: “We are about to have the most amazing quarter in our history, building and delivering more than twice as many cars as we did last quarter,”

Last quarter was 40, of which 22 was S&X. So they're planning to deliver 80. 55+25?

 

[sundaymorning]

Looks like a little boy that just seen his very first set of BOOBS after that comment.View attachment 336775 View attachment 336776 View attachment 336777

Thanks for this post. I haven’t been following Tesla as close as I used to due to some confidence that they’ll deliver, so I missed thisninterview. His brother did a wonderful job of deflecting all questions that may be misinterpreted or taken out of context by analysts. I wish more interviews could be like this...

Base on what was said, it appears they are razor focused right now and are quite confident on their ability to produce/deliver 3s. Exciting times ahead.

 

[Esme Es Mejor]

Ganfeng, the world’s largest producer of lithium, signs strategic cooperation agreement with Tesla, the world’s largest maker of lithium-ion batteries. Not many details in the article, but looks like one more thing falling into place for the massive growth ahead:

BRIEF-Ganfeng Lithium Signs Strategic Cooperation Agreement With Tesla

 

[Tslynk67]

there is a hysterically funny comment that you left out from the article
"...Tesla’s Q3 delivery numbers will be better than many expect and I fear that up to $650 million of unexpected regulatory credits will give rise to paroxysms of ecstasy among Tesla longs who will undoubtedly bid the stock price to unsustainable nosebleed highs..."

I'm hoping that Tesla DON'T use ZEV credits to get into profit for Q3, because this will be seized-on by some parties to declare it a "one-off" or "misleading" construction. If they could manage it without would be much more robust and would lead to a bigger SP pop.

 

[Remus]

I'm hoping that Tesla DON'T use ZEV credits to get into profit for Q3, because this will be seized-on by some parties to declare it a "one-off" or "misleading" construction. If they could manage it without would be much more robust and would lead to a bigger SP pop.

I am more OK with that, they are going through a delivery hell, that cost money. Q4 will see more production and more delivery.

 

[Esme Es Mejor]

I'm hoping that Tesla DON'T use ZEV credits to get into profit for Q3, because this will be seized-on by some parties to declare it a "one-off" or "misleading" construction. If they could manage it without would be much more robust and would lead to a bigger SP pop.

They can’t not sell them. They’re acquiring far more ZEV credits than in the past, and they’re only going to get more going forward.

I hope the profit is high enough that it exceeds ZEV sales, just so it shuts down that stupid talking point. But revenue is revenue, and every other automaker benefits from ZEVs more than Tesla—they get to use the full value of their credits, rather than selling them at a discount.