TSLA Market Action: 2018 Investor Roundtable

[sundaymorning]

I commented further on this in the "Articles re Tesla - Fact or Fiction" thread. This so-called "test" has multiple hallmarks of a deliberate hit piece. Using a 2015 Tesla with the no-longer-updated Autopilot 1 is the most obvious. (In 2015, Volvo's cars were smashing into humans at their own PR party advertising self-driving.) The fact that AEB in the 2015 Tesla is specifically advertised to "reduce the severity of impacts" and "NOT to prevent crashes", and that the 2015 Tesla *did* reduce the severity of the impact, but that it was reported as a "failed test", is a subtler form of dishonesty.

Good point. I remember that Volvo incident when it smashed into a person with spectators watching. Can you post the Volvo video here so others can see? Thanks.

 

[wipster]

Tesla is not doing a cap raise, the SP is largely irrelevant. Whereas the more times shorts transfer shares to longs, the larger the spike hammered through the heart of FUDzilla.

Mongo, you bring up a good point. Many people don't realize that the current stock price has nothing to do with with the actual amount of money a company has on hand. Once the shares from an IPO or follow on stock offering have been purchased, that's it, that's all the company is going to receive, which is the amount they sold it for. Doesn't make a difference if it goes up 1,000%, those shares have been converted to cash for the company selling them.

Any trading after that is between individuals or financial firms or other companies owning the chunk of the company that piece of paper represents. While it may reflect the perceived financial health of the company, in reality it doesn't affect the actual condition of the company at all. That being said however, perception is sometimes accepted as reality, so the higher the stock price the better!

 

[Unpilot]

Random thoughts...probably posted before...but...
It seems all the talk about new cars coming into the BEV field leave out 3 essential problems that Tesla has or is close to solving.

1. They have to make a compelling car. The bolt,Leaf,i3 just are not sexy/attractive/compelling...Ipace more so.
2. They have to scale which means large CAPEX and sourcing of batteries, changing of factory lines
3. Infrastructure...IMHO this is bigger than the other two. No large scale fast charging network. So other company's can't promise anything more than a city car.

I bought a Volt before my MS precisely because of this point. I had no fear of range with the Volt.

All this before talking about the issue of the legacy dealer network which will hate supporting a large number of BEV's.
Or the expertise in engine and transmission design that would need to be retrained in electric propulsion.

After reading this I am sure this has been hashed out a ton...but in light of the last week SP it feels good to put it down again.

 

[wipster]

Preachin' to the choir unpilot, but we're singin' along with ya!

 

[Unpilot]

Yeah I know. Confirmation bias and all .....but in looking for a error in my thinking...I am pleasantly happy to report I have found none.

 

[Ugliest1]

Yeah I know. Confirmation bias and all .....but in looking for a error in my thinking...I am pleasantly happy to report I have found none.

I thought I had an error in thinking once, but I was mistaken. At least that's how I see it.

 

[JRP3]

Self driving Volvo

 

[jhm]

This would play into a news nullification response quite well. Shorts will be able to run low delivery in Q2 narrative and reinforce it with an attack on the price. But ultimately this is a bear trap. Deliveries are spring loaded to boost Q3 pushing Tesla into profitability and positive cash flow.

So keep your powder dry until you see the whites of their eyes. Let them fire the first shot. When they attack the price, buy at whatever discount they give us.

A bear trap is the perfect prelude to an epic squeeze. Musk is very skilled at stumbling into the next quarter to set it all up.

Just wanted to remind folks that some of us (not just me) saw this bear attack coming and know that bears would emphasize low Q2 deliveries while dismissing the peak production figure. What I did not anticipate was just how far shorts could drive the price. I figured we would test $330.

At any rate, it was completely foreseeable that bears would attack and feel victorious. They would especially feel victorious about driving the price down when Musk had promised that they be burned. I do believe that this sense of vindication is part of the set up to the burn. The burn has not yet begun. Simply building 5000 Model 3 in the span of 7 days is not the burn or even the fuse.

So what is the burn? We can't rule out some surprise development. Perhaps. But personally I'm inclined to see the emergence of positive cash flow and profitability as the the completely out in the open slow burn. This is a nontrivial transition. Tesla has front loaded Q3 with an extra 11k Model 3 built in Q2 but to be delivered in Q3. Sure this is a little bit of a gimmick, so Tesla will need to sustain positive cash and profitability through Q4 to complete the burn. So I am looking at a 6 to 9 month burn. I don't think shorts will be able to survive 6 months of positive cash flow. They will find it increasingly costly to keep suppressing the stock for that length of time. But even if they do, Tesla in a position of free cash flow would be able to repurchase shares at whatever discount shorts would insist upon. In anticipation of paying off the 2019 bonds in Q1, it would not hurt to either repurchase shares or bonds as the cash is accumulation. Either way Tesla uses cash to reduce dilution when the bonds are converted to stock for final payment.

If one assumes that Tesla is positioned to generate enough cash over the next 9 months to pay this debt, then it leaves open the question what to do with that cash before the final payment is due. Why park that cash when they could buy the stock up to $360? To settle the debt in cash is the same as paying about $360 for the stock. So long as the stock is well below $360 it is cheaper for Tesla to repurchase shares at a 16.7% discount than to park cash for a cash settlement.

To play this really well, Musk needs the shorts to feel like they are invincible. The more victorious they think they are, the more push the price down. This gives Tesla a huge discount on settling this debt. Tesla could start quietly buying up shares anytime, even as the bears mock Musk for the burn of the century that never happened. All the while, Tesla is quietly cashing in on that discount. So let's keep this our own little secret. Do we really want the shorts to know when they are being roasted?

 

[The Blue Owl]

.This gives Tesla a huge discount on settling this debt. Tesla could start quietly buying up shares anytime, even as the bears mock Musk for the burn of the century that never happened. All the while, Tesla is quietly cashing in on that discount.

What are the disclosure requirements for this move? I am assuming there must be some, but I don’t know enough about securities laws.

 

[generalenthu]

Just wanted to remind folks that some of us (not just me) saw this bear attack coming and know that bears would emphasize low Q2 deliveries while dismissing the peak production figure. What I did not anticipate was just how far shorts could drive the price. I figured we would test $330.

At any rate, it was completely foreseeable that bears would attack and feel victorious. They would especially feel victorious about driving the price down when Musk had promised that they be burned. I do believe that this sense of vindication is part of the set up to the burn. The burn has not yet begun. Simply building 5000 Model 3 in the span of 7 days is not the burn or even the fuse.

So what is the burn? We can't rule out some surprise development. Perhaps. But personally I'm inclined to see the emergence of positive cash flow and profitability as the the completely out in the open slow burn. This is a nontrivial transition. Tesla has front loaded Q3 with an extra 11k Model 3 built in Q2 but to be delivered in Q3. Sure this is a little bit of a gimmick, so Tesla will need to sustain positive cash and profitability through Q4 to complete the burn. So I am looking at a 6 to 9 month burn. I don't think shorts will be able to survive 6 months of positive cash flow. They will find it increasingly costly to keep suppressing the stock for that length of time. But even if they do, Tesla in a position of free cash flow would be able to repurchase shares at whatever discount shorts would insist upon. In anticipation of paying off the 2019 bonds in Q1, it would not hurt to either repurchase shares or bonds as the cash is accumulation. Either way Tesla uses cash to reduce dilution when the bonds are converted to stock for final payment.

If one assumes that Tesla is positioned to generate enough cash over the next 9 months to pay this debt, then it leaves open the question what to do with that cash before the final payment is due. Why park that cash when they could buy the stock up to $360? To settle the debt in cash is the same as paying about $360 for the stock. So long as the stock is well below $360 it is cheaper for Tesla to repurchase shares at a 16.7% discount than to park cash for a cash settlement.

To play this really well, Musk needs the shorts to feel like they are invincible. The more victorious they think they are, the more push the price down. This gives Tesla a huge discount on settling this debt. Tesla could start quietly buying up shares anytime, even as the bears mock Musk for the burn of the century that never happened. All the while, Tesla is quietly cashing in on that discount. So let's keep this our own little secret. Do we really want the shorts to know when they are being roasted?

I do not think a repurchase is realistic. They probably ended q2 around 1.5-1.6 billion, which is too close for comfort in case of some unforeseen event. They'll be able to show cash growth in q3, and the sp would have recovered.

Trying to eke out that little bit with repurchase is not worth much in the big scheme of things.

 

[iogitra]

There have been some articles in german press that the EU may start talks with the USA to reach a mutual agreement to completely remove tariffs on all types of cars. It is rumored that this proposition came from US officials and is discussed by EU officials. That may have helped a little? Afaik, that's still more a rumour than a fact, but it was covered by several news sources today. China tariffs and the steel issue should have been priced in since a while.

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Reading through Elon Musks Twitter engagements regarding shorts and parts of the media, i think it's been a mistake. If you have facts to prove your allegiations, present them. If you are suspecting there is such a kind of connection, collect evidence and prepare yourself before you engage in such a discussion. There's a not-null chance such things backfire. Media people are influential and you probably don't want them to be your enemy, since they tend to stick together, because you know ... freedom of speech, being the fourth branch of power and such. You may also attract some of the false people. Yesterday was the first day i've seen people like Marc Cohodes and MuddyWaters-Research chime in on the discussion. Those are people have an awefull lot of experience shorting stocks and you usually want them, to not have your company on the radar. It seem's to be a common belief among these people, that CEOs downtalking shorts are doing so because the company is short-worthie and those CEOs know that the company is in trouble. I think you wouldn't want that.

Maybe some of you have the time to read this open letter written some years ago. Imho, this seems to be a much better way to handle shorts attacking your stock, than what Elon Musk is currently doing.

Netflix CEO Reed Hastings Responds To Whitney Tilson: Cover Your Short Position. Now.

ps: Typos are for free. I may be a little tipsy since i listened to several QuothTheRaven podcasts and they have a 2 drink minimum. :-/

Just wanted to remind folks that some of us (not just me) saw this bear attack coming and know that bears would emphasize low Q2 deliveries while dismissing the peak production figure. What I did not anticipate was just how far shorts could drive the price. I figured we would test $330.

At any rate, it was completely foreseeable that bears would attack and feel victorious. They would especially feel victorious about driving the price down when Musk had promised that they be burned. I do believe that this sense of vindication is part of the set up to the burn. The burn has not yet begun. Simply building 5000 Model 3 in the span of 7 days is not the burn or even the fuse.

So what is the burn? We can't rule out some surprise development. Perhaps. But personally I'm inclined to see the emergence of positive cash flow and profitability as the the completely out in the open slow burn. This is a nontrivial transition. Tesla has front loaded Q3 with an extra 11k Model 3 built in Q2 but to be delivered in Q3. Sure this is a little bit of a gimmick, so Tesla will need to sustain positive cash and profitability through Q4 to complete the burn. So I am looking at a 6 to 9 month burn. I don't think shorts will be able to survive 6 months of positive cash flow. They will find it increasingly costly to keep suppressing the stock for that length of time. But even if they do, Tesla in a position of free cash flow would be able to repurchase shares at whatever discount shorts would insist upon. In anticipation of paying off the 2019 bonds in Q1, it would not hurt to either repurchase shares or bonds as the cash is accumulation. Either way Tesla uses cash to reduce dilution when the bonds are converted to stock for final payment.

If one assumes that Tesla is positioned to generate enough cash over the next 9 months to pay this debt, then it leaves open the question what to do with that cash before the final payment is due. Why park that cash when they could buy the stock up to $360? To settle the debt in cash is the same as paying about $360 for the stock. So long as the stock is well below $360 it is cheaper for Tesla to repurchase shares at a 16.7% discount than to park cash for a cash settlement.

To play this really well, Musk needs the shorts to feel like they are invincible. The more victorious they think they are, the more push the price down. This gives Tesla a huge discount on settling this debt. Tesla could start quietly buying up shares anytime, even as the bears mock Musk for the burn of the century that never happened. All the while, Tesla is quietly cashing in on that discount. So let's keep this our own little secret. Do we really want the shorts to know when they are being roasted?

 

[UnknownSoldier]

Boy it sure would have been nice if the people who "saw it coming" could have been helpful and warned people in this thread.

 

[iogitra]

JHM I think that actually Elon meant the short squeeze would appear when he announced 5k production. Let’s not forget he consumed real ammo when he bought lots of stock. That was the first attack on the shorts and it succeeded. Announcing 5k should have been the kill. However the Algos decided differently. I think they rule this game, less Elon and even less the bears.

 

[hoang51]

Boy it sure would have been nice if the people who "saw it coming" could have been helpful and warned people in this thread.

They did... I asked when were the warnings posted because I don't check this thread 24/7 (got a toddler to take care of), and it was plenty of time warning such bear trap. Only if I had time to check this thread more often as I used to... See this post here for when they were posted.

 

[oneday]

Boy it sure would have been nice if the people who "saw it coming" could have been helpful and warned people in this thread.

See TSLA Market Action: 2018 Investor Roundtable

So there were at least a couple of us predicting a dip after q2 deliveries. Combine that with the July 4 holiday trading pattern that a few other posters had mentioned regarding TSLA. I think it was partially warned about. I almost bought some calls Friday before deliveries but didn’t because of those people warning about the July 4 dips.

I think that this is temporary. Not sure how long but I’m confident it won’t last. I even bought some July 13 calls on Tuesday. More of a gamble than anything but staying positive.

 

[ggr]

Tesla could start quietly buying up shares anytime, even as the bears mock Musk for the burn of the century that never happened.

Regrettably, no. Repurchasing shares requires a board decision and a disclosure to SEC. Pretty much the only entity that can't purchase Tesla stock is Tesla, at the moment. (Unless I missed a disclosure...)

 

[cheshire cat]

. a subtler form of dishonesty.

. Welcome to the wonderful world of the European Community civil service, Bunch of "Jobsworth's" :-(

 

[WarpedOne]

I've managed to grab some @313... not a fanfare-grade achievement but still -20% from The ATH and FOMO is big with me.

 

[kbM3]

Just wanted to remind folks that some of us (not just me) saw this bear attack coming and know that bears would emphasize low Q2 deliveries while dismissing the peak production figure. What I did not anticipate was just how far shorts could drive the price. I figured we would test $330.

At any rate, it was completely foreseeable that bears would attack and feel victorious. They would especially feel victorious about driving the price down when Musk had promised that they be burned. I do believe that this sense of vindication is part of the set up to the burn. The burn has not yet begun. Simply building 5000 Model 3 in the span of 7 days is not the burn or even the fuse.

So what is the burn? We can't rule out some surprise development. Perhaps. But personally I'm inclined to see the emergence of positive cash flow and profitability as the the completely out in the open slow burn. This is a nontrivial transition. Tesla has front loaded Q3 with an extra 11k Model 3 built in Q2 but to be delivered in Q3. Sure this is a little bit of a gimmick, so Tesla will need to sustain positive cash and profitability through Q4 to complete the burn. So I am looking at a 6 to 9 month burn. I don't think shorts will be able to survive 6 months of positive cash flow. They will find it increasingly costly to keep suppressing the stock for that length of time. But even if they do, Tesla in a position of free cash flow would be able to repurchase shares at whatever discount shorts would insist upon. In anticipation of paying off the 2019 bonds in Q1, it would not hurt to either repurchase shares or bonds as the cash is accumulation. Either way Tesla uses cash to reduce dilution when the bonds are converted to stock for final payment.

If one assumes that Tesla is positioned to generate enough cash over the next 9 months to pay this debt, then it leaves open the question what to do with that cash before the final payment is due. Why park that cash when they could buy the stock up to $360? To settle the debt in cash is the same as paying about $360 for the stock. So long as the stock is well below $360 it is cheaper for Tesla to repurchase shares at a 16.7% discount than to park cash for a cash settlement.

To play this really well, Musk needs the shorts to feel like they are invincible. The more victorious they think they are, the more push the price down. This gives Tesla a huge discount on settling this debt. Tesla could start quietly buying up shares anytime, even as the bears mock Musk for the burn of the century that never happened. All the while, Tesla is quietly cashing in on that discount. So let's keep this our own little secret. Do we really want the shorts to know when they are being roasted?

How does the trigger being great cash flow square with the prediction the shorts position would explode in about 3 weeks (today)?

 

[CorneliusXX]

Mongo, you bring up a good point. Many people don't realize that the current stock price has nothing to do with with the actual amount of money a company has on hand. Once the shares from an IPO or follow on stock offering have been purchased, that's it, that's all the company is going to receive, which is the amount they sold it for. Doesn't make a difference if it goes up 1,000%, those shares have been converted to cash for the company selling them.

Any trading after that is between individuals or financial firms or other companies owning the chunk of the company that piece of paper represents. While it may reflect the perceived financial health of the company, in reality it doesn't affect the actual condition of the company at all. That being said however, perception is sometimes accepted as reality, so the higher the stock price the better!

This isn't strictly true. While they may not need fresh cash in the form of equity, Tesla will still need to raise a lot of debt over the coming years, whether it be bonds issued by the company or the securitisation of auto loans. The lower the share price, the worse terms Tesla is likely to receive.

Additionally, the prospect of a higher share price in the future is what makes employee options appealing as compensation. If this seems less likely the Tesla will have a more difficult time attracting top talent.

Neither of these issues are binary but play out along a spectrum where debt raises and hiring are marginally more difficult as the equity position of the company reduces.