TSLA Market Action: 2018 Investor Roundtable

[Wooloomooloo]

I think it's naive to think that all of the negative media coverage is not affecting investor sentiment of TSLA. TSLA clearly over-promised and under-delivered on their ramp targets during the model 3 ramp, and liquidity has taken a huge hit as a result. However, it's looking more and more like Tesla has finally caught up to their target, or is very very close, yet the media is still treating Tesla as if they are incompetent at production, safety, and quality control. The last piece on CNBC with Lopez, another reporter with close ties to Chanos, and a Yale dean with ties to Chanos, was ridiculously biased against Tesla, with no alternative perspective whatsoever. They said several times that investors should be thinking seriously about selling out of Tesla. You think that has no effect on investor sentiment?

OK but you’re conflating two completely different things in your first two sentences above. One is the obvious FUD or sensationalism around everything to do with Tesla (Red Bull drinks and walking through sewerage) and the other is their historic record of under delivery. One is conjecture, the other is fact.

Promising 200k Model 3’s by the end of 2017 and fully autonomous driving by 2018 are obvious howlers, among a handful of other announcements but those not becoming true, have not had an obviously negative impact on the price, if you consider that by traditional accounting and share pricing methods, Tesla is over priced.

I think it also has to be said, that short-selling against a single company in a bull market over a long period of time, simply isn’t a viable strategy, really for 2 reasons. One is that eventually one of three things happen to the company

1) You’re proven right and the company collapses. You win, but you move on
2) The price becomes low enough that someone buys the company. Depending on your position at the time it becomes public, you could get seriously burned
3) The company continues to perform well, sues its detractors and you get caught out (like the Fairfax example)

The other reason is that short selling depends on there being 2 parties to effectively bet against continuously. First off the person holding the stock (your borrow) and secondly the person you actually short sell to, who thinks the stock is going to rise. There always has to be someone on the other side of the trade. When the news is so chronically bad that investor confidence is extremely low, you can’t really go large on shorts, because no one is taking your trade and other people are selling. You get caught in a cycle of lower offers (which sounds good for the short) but shorting either relies on the price going even lower and stock only goes so low before someone figures out that either 1 or 3 above is going to happen, then there is no one left to bet against, or knowing something the other guys don’t so you short during a rally. Rallies don’;t happen during a *sugar*-storm of FUD.

The short positions on Tesla are really riding the price volatility and the volatility has historically been caused by the difference between what Musk says and Tesla does. As that gap closes (as you point out) the volatility will ease,

 

[SteveG3]

OK but you’re conflating two completely different things in your first two sentences above. One is the obvious FUD or sensationalism around everything to do with Tesla (Red Bull drinks and walking through sewerage) and the other is their historic record of under delivery. One is conjecture, the other is fact.

Promising 200k Model 3’s by the end of 2017 and fully autonomous driving by 2018 are obvious howlers, among a handful of other announcements but those not becoming true, have not had an obviously negative impact on the price, if you consider that by traditional accounting and share pricing methods, Tesla is over priced.

I think it also has to be said, that short-selling against a single company in a bull market over a long period of time, simply isn’t a viable strategy, really for 2 reasons. One is that eventually one of three things happen to the company

1) You’re proven right and the company collapses. You win, but you move on
2) The price becomes low enough that someone buys the company. Depending on your position at the time it becomes public, you could get seriously burned
3) The company continues to perform well, sues its detractors and you get caught out (like the Fairfax example)

The other reason is that short selling depends on there being 2 parties to effectively bet against continuously. First off the person holding the stock (your borrow) and secondly the person you actually short sell to, who thinks the stock is going to rise. There always has to be someone on the other side of the trade. When the news is so chronically bad that investor confidence is extremely low, you can’t really go large on shorts, because no one is taking your trade and other people are selling. You get caught in a cycle of lower offers (which sounds good for the short) but shorting either relies on the price going even lower and stock only goes so low before someone figures out that either 1 or 3 above is going to happen, then there is no one left to bet against, or knowing something the other guys don’t so you short during a rally. Rallies don’;t happen during a *sugar*-storm of FUD.

The short positions on Tesla are really riding the price volatility and the volatility has historically been caused by the difference between what Musk says and Tesla does. As that gap closes (as you point out) the volatility will ease,

Didn’t promise 200K. Explicitly and repeatedly talked about ideal world, 100-200K,... and, in the same breath talked about reality, hell ahead,...

You can go back and see yourself
or listen to past earnings calls,

To suppliers:

We will ramp per plan. You better be ready or you are out.

To investors:

If we don’t tell suppliers that, they will be late on a realistic date. Must tell them ideal date with teeth so there is margin of error. Reality will be reality.



Musk walked a tightrope of what he felt very important to motivate suppliers with and have them take seriously & the importance of letting investors know the real ramp will not match the ideal one. He clearly did this. Repeatedly.


Has Tesla been late with things? Yes, of course. But let’s not inadvertently exaggerate. Musk mentioned as ideal but never even remotely “promised” 100,000-200,000.

 

[Boomer19]

Here is my theory (pure speculation):
Elon may have known that some of the major investors (such as Ron Baron and Tencent) were planning to further increase their holdings once Tesla can demonstrate 5k/week M3 production. He figured they would not jump right away on 1st of July due to the Holiday-week, but he expected them to start putting on a major buying pressure driving the stock up from past Monday (9th), hence the timing in his tweets. However, the investors knew that Q2 results will look really bad and the Shorts will use that to drive the stock lower, so they decided to wait another 3 weeks and start accumulating at a more favorable price. So now Elon's prediction turns into typical time-miss by a factor of 2 and we have to endure some more ups and downs and sideway moves.

ron baron has specifically said he wihshes he could invest more, but it’s against the principles of his investing. he’s maxed out the weight on tesla in the portfolio. at least that’s my understanding. i could be wrong. but doesn’t mean your idea is wrong, could be anybody. others have speculated similarly.

 

[SteveG3]

@Wooloomooloo what’s more, via forecasting of earnings (how fundamental analysis is done) Tesla is not overpriced in everyone’s models. It’s quite underpriced in mine and many others. That was the basis of my buying it in 2012 and keeping my core position today. Had nothing to do with faith, cults, etc.

People may have different projections of Tesla’s future earnings and growth rates but saying it is overpriced as a given and that longs are all about Elon belief/cult is just a media false talking point that’s been repeated like a big ad campaign. fwiw, I don’t think that is an accident.

 

[Zhelko Dimic]

The other reason is that short selling depends on there being 2 parties to effectively bet against continuously. First off the person holding the stock (your borrow) and secondly the person you actually short sell to, who thinks the stock is going to rise. There always has to be someone on the other side of the trade. When the news is so chronically bad that investor confidence is extremely low, you can’t really go large on shorts, because no one is taking your trade and other people are selling. You get caught in a cycle of lower offers (which sounds good for the short) but shorting either relies on the price going even lower and stock only goes so low before someone figures out that either 1 or 3 above is going to happen, then there is no one left to bet against, or knowing something the other guys don’t so you short during a rally. Rallies don’;t happen during a *sugar*-storm of FUD.

The short positions on Tesla are really riding the price volatility and the volatility has historically been caused by the difference between what Musk says and Tesla does. As that gap closes (as you point out) the volatility will ease,

I would have agreed with you for a regular shorting methods.
However, I now attribute high percentage chance that Jesse theory is correct: some shorts are out there trying to cause crisis of confidence and bankrupt Tesla, not to profit from simple volatility (though there are probably those too, esp. conv. bond holders):
Elon Musk vs. Short sellers
I am usually very sceptical of conspiracy theories, this may be first time ever I'm buying into a story like this above.
And I've been watching Tesla/TSLA for over 3 years, so I have more nuanced sense of the price history than Jesse can convey in a single post.

Oh, and btw, please check @zdriver post on put volumes he observed:
Elon Musk vs. Short sellers
to understand one way short may have been executed, through massive put buying. This, if you thought that simple uptick rule would have been enough of the protection. Part of it is making money, part of it is mobilizing MM's hedging actions (MM's chasing delta hedging) to achieve desired outcome, i.e. hurt SP.
This ties in exceedingly well with Jesse's theory.

 

[Boomer19]

It's surprising because it didn't work that way in past. I'm sure you remember the 1k and >2k exit rate in Q4/2017 and Q1/2018 and that those were not sustainable average rates during the next 4-8 weeks. If Tesla keeps up that 5k rate this time, then it's different - which is kind of a surprise for some of us bears.



So what? Most of the criticism that has been written here for weeks is absolutely one-sided. It surely works the same way with positive media coverage, right? I can assure you that most bears feel a sudden urge to throw up, when there is yet another headline about testing "the Tesla $35,000 mass market vehicle". Can i see that car please? We currently have like the 4th wave of articles about a soon to be running factory in china. We have been bombarded with $4000 a share price targets on TV and 1 million cars in 2020 production goals. Would be nice if Tesla can do that, they'll need it for the autonomous TaaS-Fleet, that will be up and running 2-3 years from ... uh ... any point in the past since 2015. I got all that information from the negative media coverage, in case you asked yourself.

From a bearish perspective such stuff is bullish FUD, which is spread by the media without proper research. I'm sure those are classic hit pieces aiming to destroy that poor old Thanos chap, who has been accused to trade on insider information, which he has bought from Tesla employees or reporters. Since we have touched that topic anyway: Who has been sued for leaking internal data and mails to Electrek? Is Fred actually paying these people? How can you be sure he isn't? He refuses to state publicly, that he didn't pay Tesla employees to provide insider information, so he can buy more shares at the right time. Why is it, he went completely silent on that topic? Come on, i'm waiting for answer ...

Hey! No! Wait a second, before you bring those forks and torches. I never said, he did anything wrong. I'm only asking questions, like that one twitter guy with the 22 million followers.

Since nobody would ever accuse anybody of fraud or insider trading here, we may also want to discuss why Melissa Lee is still allowed to cover Tesla on CNBC. She's married to analyst Ben Kallo from Baird & Co. Now that's what i would call close ties. That analyst guy has been pushing his long agenda for years and Baird has been sued several times for unfair competition, violation against security trading rules and failing to disclose material information to their own customers. They sure seem to be quite shady. And there is hard internet evidence, that Mr. Kallo has been talking with Mr. Musk and Mrs. Lee repeatedly. Some people even claim, they've seen Mr. Kallo and Mrs. Lee dancing together on several occasions. We also know Mr. Musk has no problem to meet shady people. There are several pictures showing him right next to Elizabeth Holmes and we know she's a high level white collar criminal. That's some pretty shady stuff going on there. I demand answers! Why don't we gang up and find out, who's hiding behind that infamous @ElonMusk twitter account, find out where he or she lives and if Fred paid them?

Sorry, i got carried away a bit there.

Can we please forget the last paragraphs i wrote and get back to shaming that Lopez b.tch, since she's a paid shill and / or a bad reporter and has been saying bad things about Tesla publicly? Thanks.

i don’t even understand what all that was...and i’m an emotional rambler myself. but you got montana septic tank liar idiot to quote your post on twitter, so that’s great company you’re in... congratulations! you should be a proud bear.


what is it with you people? why do peoole hate tesla?

there’s only two reasons,
$ or hating/jealousy of musk

don’t pretend it’s about anything else. bears act as if they’re so appalled that he overpromises, as if thyre defending the common man.
...and those dirtbags on cnbc telling people they should dump their stock because musk mean to sh*tty journalists...and with nobody there to rebut?

talk about pot and kettle.

so you are in favor of that type of news coverage? (even though “objective media” is obviously not just tesla topic, or a new topic in general). it’s more rampant than i can ever remember, left, right, msnbc, fox, etc, it’s all a joke. people just want to be told what they want to hear, not what the truth is.

and i supposed you’re ok with the way chanos/sender/cohen/spyros acted against fairfax? prank calling the ceos 60
something year old cancer ridden assistant every night and scare tactics against his pastor? list goes on and on.

cmon man. it’s one thing to trade the swings in the stock. its another to try to bring a company down.

you’re either trading,
or it’s a good vs. evil war

 

[Esme Es Mejor]

It's surprising because it didn't work that way in past. I'm sure you remember the 1k and >2k exit rate in Q4/2017 and Q1/2018 and that those were not sustainable average rates during the next 4-8 weeks. If Tesla keeps up that 5k rate this time, then it's different.

Nah, B.

The exit rate for Q4 was 797. Tesla averaged over 800/week in Q1.

The exit rate in Q1 was 2020– Tesla averaged over 2300/week in Q2.

The exit rate in Q2 was 5031. If they average more than that in Q3, it will be... completely normal and predictable.

 

[defc0n]

Nah, B.

The exit rate for Q4 was 797. Tesla averaged over 800/week in Q1.

The exit rate in Q1 was 2020– Tesla averaged over 2300/week in Q2.

The exit rate in Q2 was 5031. If they average more than that in Q3, it will be... completely normal and predictable.

Sounds about right to me and was my understanding, and is also why I predict conservatively around 5000-5500 average per week in Q3. Although, I feel they have a better chance this quarter to exceed that average compared to Q1 & Q2 average from peak rate.

 

[Esme Es Mejor]

Nice if you bought on April 2nd. What if you bought on June 1st 2017?

It was in the 330s that day. If they were short-term traders, I hope they sold a few weeks later for a quick $50 gain. Or a few months later at $389. Or, if they didn’t sell then, I hope they’re fine holding until Elon collects his first tranche of stock under his new contract— the SP should be over 500 by then.

You pay your money, you take your chances. I don’t buy anything I wouldn’t be willing to hold through a recession.

 

[Wooloomooloo]

It was in the 330s that day. If they were short-term traders, I hope they sold a few weeks later for a quick $50 gain. Or a few months later at $389. Or, if they didn’t sell then, I hope they’re fine holding until Elon collects his first tranche of stock under his new contract— the SP should be over 500 by then.

You pay your money, you take your chances. I don’t buy anything I wouldn’t be willing to hold through a recession.

Amen to that.

 

[CuriousSunbird]

i don’t even understand what all that was...and i’m an emotional rambler myself. but you got montana septic tank liar idiot to quote your post on twitter, so that’s great company you’re in... congratulations! you should be a proud bear.


what is it with you people? why do peoole hate tesla?

there’s only two reasons,
$ or hating/jealousy of musk

don’t pretend it’s about anything else. bears act as if they’re so appalled that he overpromises, as if thyre defending the common man.
...and those dirtbags on cnbc telling people they should dump their stock because musk mean to sh*tty journalists...and with nobody there to rebut?

talk about pot and kettle.

so you are in favor of that type of news coverage? (even though “objective media” is obviously not just tesla topic, or a new topic in general). it’s more rampant than i can ever remember, left, right, msnbc, fox, etc, it’s all a joke. people just want to be told what they want to hear, not what the truth is.

and i supposed you’re ok with the way chanos/sender/cohen/spyros acted against fairfax? prank calling the ceos 60
something year old cancer ridden assistant every night and scare tactics against his pastor? list goes on and on.

cmon man. it’s one thing to trade the swings in the stock. its another to try to bring a company down.

you’re either trading,
or it’s a good vs. evil war

Of course it's about dollars. We're talking about stock investments.

 

[CuriousSunbird]

1) You’re proven right and the company collapses. You win, but you move on
,

I don't think you give up so easily at that point - after the work you've put in to understand the company. You buy the debt in bankruptcy and try to make some money on the long side.

 

[bdy0627]

Great written interview with Elon:
‘The Last Bet-the-Company Situation’: Q&A With Elon Musk

Asked about the automation, Elon said:
"We thought it would be good, but it was not good. That applies to a great deal of the automation. A whole bunch of the robots are turned off, and it was reverted to a manual station because the robots kept faulting out...It sounds good on PowerPoint and it was terrible in reality."

Why did they screw up so badly?
"Because we were huge idiots and didn't know what we were doing. That's why."

What's next for the machine that builds the machine?
"It will blow your brain right out of your skull, OK? It is so crazy."

 

[Boomer19]

Of course it's about dollars. We're talking about stock investments.

indeed. the point is, there’s a clear line between just day trading and manufacturing the destruction of a company to win a bet i.e. fairfax financial.

are you ok what they did there?
ruin lives in the name of the almighty $ ?

 

[CuriousSunbird]

What do you feel is the likelihood of my now biggest worry: Musk misjudged how effective announcing a 5k/wk rate + Chinese factory agreement would be?

Some of his comments recently do seem a little inexplicable. Reacting to the 6/26 GS prediction of 22,000 M3 Q2 deliveries by saying (on 6/27) that GS was in for a "rude awakening" when he must have known that the actual number would be close to 18.5k still makes no sense to me.

 

[Boomer19]

Some of his comments recently do seem a little inexplicable. Reacting to the 6/26 GS prediction of 22,000 M3 Q2 deliveries by saying (on 6/27) that GS was in for a "rude awakening" when he must have known that the actual number would be close to 18.5k still makes no sense to me.

that i have to agree with, puzzling

 

[CuriousSunbird]

indeed. the point is, there’s a clear line between just day trading and manufacturing the destruction of a company to win a bet i.e. fairfax financial.

are you ok what they did there?
ruin lives in the name of the almighty $ ?

Don't know enough about Fairfax to comment sensibly but as a general rule I think that selling over-valued companies is no worse (and no better) than buying under-valued companies.

 

[Boomer19]

Don't know enough about Fairfax to comment sensibly but as a general rule I think that selling over-valued companies is no worse (and no better) than buying under-valued companies.

ok never mind. yes i agree with that as well.

the fairfax reference is about the tactics short sellers used to harass manipulate the people of the company they were betting against (fairfax financial)
i linked here in case you ever feel like reading the chapter of the book that covers this saga
https://teslamotorsclub.com/tmc/attachments/fairfax-pdf.310679/

 

[brian45011]

So let’s say you’re invoiced 30 days after parts are delivered. You think it takes more than 40 - 100 days to build a Model 3 and deliver it to a customer? I don’t think that’s anywhere close to true.

Any idea of the trades credit terms on the PENA invoices at GF-1? Isn't Tesla required to maintain a "safety stock" (aka inventory) which presumably increases with growth in releases of additional cell orders? The cost of that inventory may be due before those cells are used in delivered vehicles.

The agreements with PENA/PANSY at GF-1 are heavily redacted but the ones at GF-2 at Riverbend are difficult to find anyone have a link?

 

[kbM3]

Some of his comments recently do seem a little inexplicable. Reacting to the 6/26 GS prediction of 22,000 M3 Q2 deliveries by saying (on 6/27) that GS was in for a "rude awakening" when he must have known that the actual number would be close to 18.5k still makes no sense to me.

Elon was wrong. I believe the explanation lies in the fact that Elon rarely cares about deliveries. Tesla is in the very unique position of a massive backlog of Model 3, and thus are production constrained. The deliveries are just logistics and not top of his mind.

What Elon really cares about is production rate (even more so than production). He even has been unclear like saying 500k in 2018 when I’m relatively sure he meant hitting a 5k/year rate in 2018 (now mid 2019).

He probably took Goldman Sachs number as production, not deliveries.