TSLA Market Action: 2018 Investor Roundtable

[WarpedOne]

Earnings results will take care of the haters in due course, don’t have to worry about that.....

You must be new here ...

Haters do not 'hate tesla because of previous earnings.
Nothing increases the hate more than the target being successful.
Most of tesla hate comes from tesla's sucess. More success, more hate.

So, due to good earnings they will hate tesla even more.

BioSehnsucht:

With a bit of pre-planning this could have however been rather clever - arrange to have the various owner groups / etc get permission to host meetups at nearby mall parking lots or whatever, print up a bunch of flyers to give to the new owners and basically get all those new Tesla owners out the door with the bare minimum of instructing they need to get to the nearest meetup and let the fans do the rest.

Good in theory but very bad business practice... you do not put the good name on the shoulders of un-payed work force. Un-payed would en up being payed-by-some-one-else whose interests did do not align with yours. Read sabotage.

 

[SOULPEDL]

The general public in the US isn't very smart. Most of them will have be forced to give up gas while kicking and screaming.

Disagree (about kicking and screaming part). They just think that they can't charge it anywhere and think it will take too long. That's the #1 and first question I get from everyone - 100% of the time. Like "But how do you get to LA?" (from Phx). And they haven't figured out the cost savings on fuel - that actually took me a while. So cheap, must be wrong? The whole concept is too new, like not having to get gas for the commutes. The world is still flat to most.

That all changes when their friend gets one.

I was just at a conference in SF on sensors this week. This guru had a page full of gas and carb sensors talking about the future. It was a total buzz kill for the rest of his talk - so 2D. We go through long periods in life thinking it's all the same, then all the sudden... poof and next you can't remember how you survived before (Cassettes, TV, eMail, Cell Phone, GPS, EV).

I hate my Murano, what was that dog and why am I still insuring it? I drove the M3 1,500 mi this week for the conference, sailing, and a Tesla Factory Tour. I only had to check the air in the tires? It almost felt wrong preparing for the trip. An air pump, that's it? I love meeting people at Superchargers. Who hangs out at gas stations?

 

[UnknownSoldier]

I'm finding this page quite interesting to follow, predictions seem a lot better that those bloody analysts... Not that I'm going to trade any shares, but still fun to watch: TSLA - TESLA

"Bullish Engulfing" - sounds like a good Twitter handle...

View attachment 337030

So the previous indicators were alternating "Buy", "Sell", and "Short"
Is this a demonstration of how useful technical analysis really is?

 

[SOULPEDL]

I'm going in to help, and have offered lots and ask how I can help. On my Factory Tour this week, I asked if my testing the EAP in difficult situations helps. I guess not yet, but I still try. (Oh *sugar*, I just violated my NDA. But man that Test Track was something right?). I'm constantly selling this car - so easy when you're right.

I feel a pop coming very soon!

 

[Tslynk67]

So the previous indicators were alternating "Buy", "Sell", and "Short"
Is this a demonstration of how useful technical analysis really is?

I had the same reflection at first, but then I realised this was logical as this is the signal history, not a scheduled update. So it makes sense that they alternate.

 

[Fact Checking]

Is this a demonstration of how useful technical analysis really is?

So if you look at just the last one year of the chart, you can see how conflicted the stock price is! The results of technical analysis will be a reflection of that, and the outcome will largely depend on the time frame of the analysis.

Currently the $TSLA stock price is mainly driven by two opposing forces: artificially generated selling pressure pitted against artificially suppressed buying pressure. On most social media FUDboys still outweigh fanboys by 10:1.

Since I believe the short thesis is, at this point, in 80-90% a confidence trick, it only has a limited life time left. Just read this article by article take-down of recent Tesla FUD pieces by major news organizations:

https://www.quora.com/Is-it-fair-to...re-unfairly-biased-against-Elon-Musk-or-Tesla

FUD has risen to such levels that it's now self-defeating to a large degree.

Of course Tesla can still snatch defeat from the jaws of victory: they were growing crazy fast for a decade, which kind of growth always comes with inefficiencies accumulating, and it also teaches a kind of sloppiness of execution - if you are a crazy growth story then it's much harder to execute, plus investors are more forgiving.

Amazon too had this phase where their core competency (inventory management and delivery) was an expensive mess. They matured out of it quickly and became a company that hasn't raised equity for the last ~20 years since they became cash flow positive, valued at around a trillion dollars currently.

 

[Fact Checking]

Tesla’s Q2 report states ~22000 3s sold in Q2.

Their production letter said 18,440 Model 3's delivered (sold) in Q2:

"Q2 deliveries totaled 40,740 vehicles, of which 18,440 were Model 3, 10,930 were Model S, and 11,370 were Model X."​

Another data point is the Troy Model 3 VIN tracker, which estimates 56,582 Model 3 deliveries (sales) in Q3 currently.

You have to click on the 'Delivery' tab on the spreadsheet and look at the quarterly graph to see that estimate. It's not displayed as prominently as his production estimates, because his Q2 delivery estimate wasn't very good due to the 200k U.S. delivery limit and large inventory levels messed with the VIN tracking+reporting method. But I think Q3 deliveries will be a lot smoother, there's no tax credit delivery constraint, so the VIN tracking+reporting method should offer a pretty accurate lower estimate for deliveries.

If they pull off a well executed 'delivery push' in the last 9 days of the quarter they might even approach 60k Model 3 deliveries, and trim inventory levels at the same time - which would create two independent positive effects to improve Q3 results. I.e. every car delivered straight from inventory near the end of the quarter counts 'double': it increases revenue, cash flow and income, while reducing cash tied up in inventory.

It's still unclear to me what their end of quarter production level is going to be:

• Having anything lower than 4k/week would probably be bad optics, even if it made sense in terms of inventory management.
• Maybe they'll match the 5k/week they did at the end of Q2: that keeps production generated inventory at steady state, while giving "we entered and exited Q3 at 5k/week rates and can sustain that and more, and are waiting for Panasonic to ramp up 2170 manufacturing output in the next couple of weeks" optics for the early November Q3 conference call.
• A 6k week would be nice optics, but is probably not in the cards - and would be attacked as a 'not sustainable peak rate!' stunt. It's also costly in terms of inventory levels and cash flow.
  
• My guess is that in the final week they'll do close to the ~4k/week they guided for, which will further improve inventory: they entered Q2 with a 5k/week push and will exit it 4k/week sustained, that's 1,000 fewer Model 3's in inventory from end of quarter production - a nice ~$40-50m improvement in inventory levels and maybe a +$20-30m further improvement in cash flow. Having a lower rate at the end of the quarter would also free up more Fremont workers to participate in the delivery push: I suspect long time line workers are perfectly skilled at prepping cars for delivery, changing delivery Fifth Circle of Hell into delivery Nirvana.

If they do 4k in the final week that will also seal the deal of about 52k Model 3's produced in Q3, if the Electrek leaks are accurate - which would be right in the middle of the guided range.

 

[avoigt]

In all seriousness, this is kind of amazing. What other car company has this many owners lining up to volunteer to help with new car deliveries? Nobody else had this level of fanaticism.

One of the key reasons I started to invest into Tesla is anticipating that people create a "feel good" for themselves if they engage and that drives behavior. This behavior leads to buy the car, buy the stock and expressing themselves in helping a company to achieve their environmental friendly objectives with their work time as a volunteer and free of charge.

Most will call that fanatic I call that logic and natural. People do this all day long, helping others, donating or supplying food to help with the greater good, cleaning beaches from plastic and so on. The feeling this creates is priceless.

 

[lklundin]

Might the downside be some people will actually belief these Shortsville Times sarcasms as real?

That will almost surely happen:
Iran's news agency portrays satirical Onion story as its own - CNN

I think everyone found this amusing. Well, everyone except one Iranian journalist and their boss...

 

[lklundin]

Earnings results will take care of the haters in due course, don’t have to worry about that.

Meanwhile, sending even s small amount of Model 3 units to China would be very good for brand building. Choosing China as the next market to launch in will be seen locally as a sign of respect - a good 1-2 punch along with the construction of the Shanghai plant.

I doubt Tesla would want to relive the situation where they get a half million reservations for a car they will need 2-3 years to produce in numbers.

So I think the Model 3 demos will only go to China once they have made substantial progress at GF3.

Instead I am guessing that 2019H1 will see large-scale sales of the Model 3 in Europe:
1) 19 Model 3 VINs registered recently, apparently for Europe,
2) large number of open Tesla Sales positions (esp. German speaking) in Europe only exceeded by American ones,
3) 2019H1 sees the end of substantial BEV incentives in Germany + Austria.

PS. Is current Tesla exports for Europe shipping on Panamax vessels? I think for any order-of-magnitude expansion, anyone (incl. Tesla) will run into unforeseen challenges. Since the next GF is planned for China and not for Europe, Tesla will need a lot more of these ships to enter the European market (because it makes no sense to bring the Model 3 to Europe only after a European GF can make them).

 

[Fact Checking]

Max Pain = 305

09/21/2018

Not always accurate.

Max Pain | Maximum-Pain.com

But frequently especially when there is so much money at stake. Within 1% would be a confirmation.

closed in the max pain range i see

Max Pain Definition | Investopedia

then

Max Pain | Maximum-Pain.com

Just wanted to point out this additional thing: I think the explanation in Investopedia is incomplete, and misleading to a certain extent as it appears to be assigning a certain level of 'intent' to option writers driving the price towards certain 'max pain' price levels.

But if we look at how modern market makers operate, then the price moving towards 'maximum pain' is a side effect of delta-neutral inventory management.

This is especially true for Tesla, where there's a 'bathtub curve' distribution of options risk-at-value:

Since the $TSLA stock is very polarized, with price expectations wide apart and a lot of high-leverage options bets, most of the options are written by market makers, few are directly traded between longs and shorts.

This means that MM delta-hedging builds up an inventory of shares either short or long, representing the downside/upside risk presented by the options market. As expiry draws closer, the probability of tail events decreases exponentially, and the risk drains out of the options - while open interest does not change nearly as fast. This means that options writers with a delta hedge will have excess inventory and need to drain this inventory: net writers of PUTs are going to buy shares as time passes (they were short hedged up to now), net writers of CALLs are going to sell stock. The equilibrium price of these two forces is usually close to the 'maximum pain' point that derives from the open interest.

The strength of these two forces depends on the total open interest in options, which was ridiculously high yesterday: 353K PUTs, 171K CALLs, a total of over 50 million TSLA shares of exposure on that single expiry day, with a total value at risk of over 15 billion dollars...

It is also I think a partial explanation for the recent peak FUD: if shorts had any negative story about Tesla, or had media contacts to manufacture/magnify a negative story about Tesla, then this week was probably the most profitable moment to use that resource.

Barring cataclysmic events it seemed very likely to me that the stock would trade close to the maximum pain point.

BTW., according to maximum-pain yesterday's ideal closing price should have been $305, while it closed at $299: this might be explained by the limitations of the max-pain metric that looks at the whole open interest. If we look at the near-the-money distribution alone:

 PUT $277:    841, CALL $277:  1,227
 PUT $280:  6,998, CALL $280:  2,754
 PUT $282:  1,113, CALL $282:    431
 PUT $285:  4,104, CALL $285:  2,691
 PUT $287:  3,381, CALL $287:    694
 PUT $290:  6,962, CALL $290:  4,123
 PUT $292:  1,337, CALL $292:  1,070
 PUT $295:  2,937, CALL $295:  3,366
 PUT $297:  1,401, CALL $297:  2,423
 PUT $300: 10,391, CALL $300:  8,876
 PUT $302:    404, CALL $302:  1,852
 PUT $305:  1,567, CALL $305:  4,608
 PUT $307:    256, CALL $307:  2,086
 PUT $310:  2,854, CALL $310:  6,599
 PUT $312:    151, CALL $312:  1,509
 PUT $315:  2,930, CALL $315:  3,796
 PUT $317:    159, CALL $317:  1,639
 PUT $320:  5,827, CALL $320:  6,583
 PUT $322:    103, CALL $322:  1,028

And assume that the residual risk of billions of dollars of other open interest is at most a hundred thousand shares equivalent or so, then the distribution of inventory related to the above open interest clearly puts the equilibrium price to between $297 and $300.

Since there wasn't particularly strong buy or sell pressure yesterday otherwise, I'd guess that the end of day draining of residual inventory defined the price action: which was particularly visible in the final few minutes when market makers got rid of all the residual delta-hedge TSLA inventory.

Next week's $TSLA price action should be a lot less constrained by options expiry, the next bigger options day is October 19th:

2018/Sep/21:  PUTs:   353,566 ; CALLs:   171,979
2018/Sep/28:  PUTs:    29,545 ; CALLs:    43,110
2018/Oct/05:  PUTs:    15,514 ; CALLs:    19,121
2018/Oct/12:  PUTs:     7,210 ; CALLs:    15,223
2018/Oct/19:  PUTs:   188,546 ; CALLs:    72,724
2018/Oct/26:  PUTs:     3,586 ; CALLs:     2,284
2018/Nov/02:  PUTs:     1,879 ; CALLs:     1,157
2018/Nov/16:  PUTs:    65,619 ; CALLs:    35,972
2018/Dec/21:  PUTs:    75,741 ; CALLs:    46,707
2019/Jan/18:  PUTs:   458,235 ; CALLs:   209,081
2019/Feb/15:  PUTs:     6,889 ; CALLs:     9,536
2019/Mar/15:  PUTs:    53,099 ; CALLs:    34,513
2019/Jun/21:  PUTs:    59,075 ; CALLs:    34,407
2019/Aug/16:  PUTs:    18,125 ; CALLs:    12,503
2020/Jan/17:  PUTs:   190,491 ; CALLs:    70,491
2020/Jun/19:  PUTs:     2,137 ; CALLs:     1,346
      total:  PUTs: 1,529,764 ; CALLs:   781,144

But even Oct 19 is only going to be half the magnitude of yesterday's options expiry event.

The next really big one is going to be the 2019 Jan 18, with 665K options already open (!). Short squeezes and big drops are more likely between these options events, which act as 'synchronization points' for the pricing between options and the underlying stock.

Of course if the fundamentals change then this many outstanding options will greatly enhance volatility, both up and down, as market markers scramble to delta hedge tens of billions of dollars of open options interest: the current open interest (excluding the 500K options that expired yesterday) is over 170 million TSLA shares (!), with a maximum total value-at-risk of over 50 billion dollars...

At least that's my reading of the numbers - is there anything important I missed perhaps?

 

[avoigt]

The current production as well as delivery estimates supported by sources and data from insideEv, Electrek and Troy show a more and more consistent picture versus what we have seen in last quarters.

This time it looks like its consensus now that the production and delivery will be at least within guidance. With the strong focus of deliveries and a Kimball smiling ear to ear with confidence I expect them to exceed deliveries of the 3.

As said before the strong delivery push and attempt to reduce inventories points to the quarter end efforts to achieve profitability. Its all now a question about cash flow and what kind and level of profitability is achieved.

We will see a record quarter for sure but it remains to be seen if they can convince on all areas. For me as long term bull it really does not matter as Q4 will be even better but for the short term market evaluation and with that the SP its of importance.

We have seen that the shorts artificially manipulate the stock price with a high degree of knowledge and funding and kept it successfully under $300. The number $300 is not any kind of chard marker or resistance that is of any importance at all. The 3 in front is just a number shorts don't like to see for psychological reasons. It sound better to say the stock is still in the 200s. A 299 looks better to them as a 300.

They put all efforts in it for good reasons. If they are able to keep the SP at these levels until the official Q3 numbers are release the run and pop we all expect will likely go up to around $380 and stop there with a larger short attack and media fud. If we are at $350 and the market realizes they have been too negative about production, delivery, cash flow and profitability than the wild herd of bulls released may trample over and can't be controlled any more.

That would be the worst case and night mare scenario for shorts and a squeeze could than not be excluded. Its all about control which includes the public opinion but also the big money thats still shy to invest into Tesla but may change course if we see what we Bulls expect. Shorts are completely powerless if the market changes mind. For that reasons they need to have strong and good FUD to keep the sheeps in the gate.

Exciting times ahead.

 

[lklundin]

Another point to make is the apparent lack of priority for M3 reservation holders. Tesla is completely focused on pushing out cars to anyone they can immediately at the end of the quarter now and ignoring those with reservations. It is in their best interest to do so for quarterly numbers.

These sorts of debacles have unfortunately taught me to not put down a reservation for a Model Y once that time comes because it’s looking like I could get one easily and possibly with incentives without having to preorder.

Don’t get me wrong, I still want a Tesla, it’s just annoying to have to play these sorts of games.

As the end nears for Tesla's Production Hell, their Delivery Hell goes into full swing.

This means they are really not able to ship vehicles to certain unfortunate locations in a timely manner.

Instead of just letting these vehicles sit and take up space in a lot somewhere closer to Fremont, they look for people
in non-congested areas (esp. Fremont) that are willing to buy now.

So yes, a reservation holder in an area where Tesla is currently maxed out on deliveries may very well find themselves overtaken by a someone closer to Fremont, even someone without a reservation.

In a sense, as a European reservation holder I am seeing nothing but this.

But does anyone have a clear indication that in a given area a non-reservation holder can overtake a reservation holder (for the same vehicle configuration)?

Absent that and apart from opportunity cost equivalent to about 3-4 TSLA shares (depending also on country), I see no reason to not to put down a reservation.

 

[CorneliusXX]

Another point to make is the apparent lack of priority for M3 reservation holders. Tesla is completely focused on pushing out cars to anyone they can immediately at the end of the quarter now and ignoring those with reservations. It is in their best interest to do so for quarterly numbers.

These sorts of debacles have unfortunately taught me to not put down a reservation for a Model Y once that time comes because it’s looking like I could get one easily and possibly with incentives without having to preorder.

Don’t get me wrong, I still want a Tesla, it’s just annoying to have to play these sorts of games.

I (somewhat sadly) had my deposit refunded. The reservation means nothing. I think by the time orders open up in the UK there will be little benefit for being a reservation holder - particularly if you're going to order a P3D. Those vehicles will be prioritised to the first people who pay.

 

[uselesslogin]

I'm so jealous with this whole end-of-quarter push and everyone who has their cars. I should've had my car by now! Oh well nothing to do but wait and keep checking with the DS.

 

[winfield100]

Going to be called cynical again (hehe), but the original question was a plant. That's just how social media works these days.

you don't realize how wrong you are. back in February, almost 5 years ago, John Broder got a Tesla 85 to "test drive from Washington DC, USA, Tesla service center, to New York City and a bit further. The supercharger network was spotty, you could not drive across the US and you needed the large 85 battery, not the 60 or the 40.
John Broder "may have had an agenda" since he did not opportunity charge, drove in circles in the parking lot ("What, my car has a GPS that can track me! and computers! and high tech!) didn't plug in when parked period, then declared the S85 useless as the battery ran out, obviously (gasoline tanks magically fill themselves) in a very biased hit piece in the New York Times and how cold he was because the heater used prrecious electrons of whicih he didn't have enough (since he "forgot" to charge/fillup
He got called upon this and complained about the tracking GPS (Which is used to tell you where nearest Supercharger is among other important stuff)
The following snowy saturday, about 20-30 members of the local EV club, EVADC.org, a bunch more unaffiliated, random, folks including 2 gentlemen from about 70 miles away in Southern Maryland, a young couple from washington DC, a few folks from New York over 250 miles away, a bunch of random extra folks, 2-3 Nissan leafs, Tesla 60's & 85's , gathered in an impromptu meetup at the Rockville, Maryland, USA Tesla service center, had coffee and hot cocoa, about 11am, about 1/2 caravaned to the Delaware supercharger, then the S 85's headed for NYC recreating Broders track (but with full batteries)
Two of the folks set up automatic tweet that sent where is, car internal temsp ("a comfy 72.1 degrees")
The caravan of 8, S85's had no problems, including the young couple who went along just for fun.
Tesla and EV folks are very passionate and enthusiastic, just as much as "gearheads"
Broder never backed down and there was an extremely grudging response at best, so the NYT has a definate bias in the form of John Broder, who couldn't be bothered to charge up the battery. Now there are a lot more superchargers, the charging network is way better, and in a very few short years. (like ~ 5)
Remember the pictures 13 years apart of New York City from 1900 and 1913.
First one had horse and buggies and 1 car,
Second one had Cars and 1 horse and buggy
(i had a tractor that you had to hand crank to start at times. 1953 Alis Chalmers that I learned how to "pop a wheelie" and get the front wheels a few feet in the air), getting a shared with 2 other famlies telephone line was a big deal, 45 miles outside washington DC)

I think your cynicism is misplaced, we like creature comforts,

 

[CorneliusXX]

View attachment 337009 Elon’s asking for help...

 

[CorneliusXX]

Just when you think you've seen it all, there is Elon begging for free labour on twitter?

While somewhat risky (non-vetted people providing tours), it is an opportunity to really build the brand further. Any volunteers that show up will likely be far more attentive and enthusiastic that an employee who is forced day in and day out to answer the same questions as part of their job. And because it's not the volunteers job, they have no quotas to meet and can spend as much time with the purchaser as the purchaser wants. Likely leading to a better experience for the purchaser.

There are quite a few other benefits too:

• It allows die-hard fans feel that they are helping the conversion to sustainable transport (at least in a small way)
• Many owners will make new connections - strengthening the community
• Free labour for Tesla (although the cost would be pretty marginal)
• A meaningful increase in deliveries this quarter - creating higher revenue and better returns. For every 100 additional cars that can be delivered, Tesla's revenue will increase by $5.5m - $6m. As a shareholder this makes me very happy.
• If vehicles are being sold as soon as they leave the factory there will likely be a significant reduction in working capital as revenue is received far sooner than in the past while supplier payment terms do not change - great for FCF.

 

[winfield100]

While somewhat risky (non-vetted people providing tours), it is an opportunity to really build the brand further. Any volunteers that show up will likely be far more attentive and enthusiastic that an employee who is forced day in and day out to answer the same questions as part of their job. And because it's not the volunteers job, they have no quotas to meet and can spend as much time with the purchaser as the purchaser wants. Likely leading to a better experience for the purchaser.

• A meaningful increase in deliveries this quarter - creating higher revenue and better returns. For every 100 additional cars that can be delivered, Tesla's revenue will increase by $5.5m - $6m. As a shareholder this makes me very happy.

regarding the "For every 100 additional cars that can be delivered", there is an odd correlation done by Kwan-Chen Ma in an article that noticed, institutions purchase 194,000 shares for every additional 100 produced.
So using that as a VERY rough metric,
1,000 would be 10 extra 100's or 1,940,000 shares, (~2 million shares upwards pressure for every extra 1,000) making a very "tasty" pop in shares bought
the 7,000 next week, if that's over and above.....

 

[winfield100]

So - let’s trust bloomberg and insideEVs at the same time.


I’m guessing 56000 model 3 deliveries in Q3, combined with 26000 S/X = 82,000 deliveries total = Elon’s double delivery claim.

@BenPrice
does this include the "pulse" of 7,000 next week in San Francisco area that's being talked about?