racer26
Active Member
Yep. I'm having similar feels. IV is too high right now to make any real earnings-related option play look worth the risk. Just gonna hang onto the ones I already have.
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A profitable Model 3 is the last straw. Until then, shorts still have hope.
racer26
Active Member
I'm so amazed that the shorts keep clinging to this notion that Tesla can't sell Model 3 profitably. If they couldn't, they wouldn't. That's literally the whole reason it took a decade to get to Model 3, was entirely to ALLOW for it to become profitable to do so.
I agree that it appears some big money has figured it out and is thus pricing in a good ER, but then i wonder about how the shorts will react? Percentage of the float sold short hasn't changed much at all in 2017. Will they just double down and rally around some way to dismiss the numbers as fake? Will there be a rush towards the exits?
jhm
Well-Known Member
I'm pretty happy to see so much storage queued up. A state like California with peak consumption near 50GW needs about 50GW of storage to eliminate fossil fuels from power generation. So that is going to take alot of diverse storage.Da Nile may not be just the rearranged letters on a conference room sign at the Fremont Factory. Your data source appears to be incomplete, unduly focused on the battery category of energy storage and possibly driven largely by: "California’s energy storage mandate (AB 2514) added a twist to existing demand for energy storage. Adopted in 2010, the bill required California’s three largest power generating utilities to contract for an additional 1.3 GW of energy storage power generation (meeting certain criteria) by 2020, coming online by 2024....
According to records available from the Department of Energy, the following California energy storage projects are announced or underway:
"
At the Halfway Point: The Effect of California’s Energy Storage Mandate
DOE has a searchable Global Energy Storage Data Base maintained by Sandia National Laboratory. Worldwide the database shows 1,630 projects with a rated power capacity of 193.2 GW.
I ran three quick searches for the USA-only; since, aside from American Samoa, I haven't notice announcements by TSLA, SCTY or AMS about projects outside of USA.
The first search was projects "under construction": DOE Global Energy Storage Database
Results were 6 projects with total rated power capacity of 78.5 MW, size and description (1 mistake --a 20 MW, Vanadium Redox Flow Battery in China) :
The second search was "contracted" projects: https://www.energystorageexchange.org/projects?utf8=✓&technology_type_sort_eqs=&technology_type_sort_eqs_category=&country_sort_eq=United+States&state_sort_eq=&kW=&kWh=&service_use_case_inf=&ownership_model_eq=&status_eq=Contracted&siting_eq=&order_by=&sort_order=&search_page=1&size_kw_ll=&size_kw_ul=&size_kwh_ll=&size_kwh_ul=&show_unapproved={}
- Advanced Rail Energy Storage Nevada, 50MW, Gravitational Storage
- Marengo Project, Illinois, 20 MW, Li-ion Battery
- Redding Utilites, California, 6 MW Ice, Thermal Storage
- Green Omni Terminal Demonstration Project, California, 2.6 MW, Electro-Chemical
- University of St. Thomas, Minnesota, 0.25 MW, Electro-Chemical
- Whole Food, Hawaii, NA, Li-ion Battery
Results were 47 projects with total rated power capacity of 2.2 GW.
Yes, many were in the Li-ion Battery Category (26 of the 47). The largest LI-ion provider appeared to be AES with 100 MW at Los Alimitos, 30 MW at Escondido and 7.5 MW at El Cajon, but I did not see AES' 20 MW in Kauai. Second place appeared to be TSLA in its various forms: 20 MW at Mira Loma, SCTY's 13MW in Kauai, and AMS' 50 MW for hybrid buildings (SCE), 3.5 for Inland Empire Utilities, and 0.75 MW for Cal State, but I did not see the 7 MW for Irving Ranch Water District.
There also multiple other Li-ion providers, including:
Other solutions included:
- Convergent's 35 MW for SCE
- Hecate had 3 projects, totaling 51 MW
- GE/Con Ed had at least one 2 MW project
The 3rd search was "announced" projects (obviously the most tenuous): DOE Global Energy Storage Database
- Two Pumped Hydro projects totaling 1.7 GW!
- Three Flywheel projects totaling 28.32 MW
- An Ice Thermal Storage project for 25.6 MW
- A Lithium Ion Titanate Battery and a Lithium Nickel Manganese Cobalt Battery project, each 10 MW
- Two Zinc Air projects totaling 13 MW
- Four Li-PO4 projects totaling 4.04 MW
- A Vanadium Redox Flow Battery 2 MW
- Miscellany: Zinc Iron Flow Battery and various Electo-Chemical projects including STEM's 85 MW which appears to be similar to AMS' hybrid buildings and likely Li-ion.
Results were 112 projects with total rated power capacity of 5.3 GW.
I downloaded the file and sorted it by size. The largest Li-ion project was No. 13 at 15 MW.
Nine of the eleven biggest were pumped hydro, totaling 4.53 GW.
The other two in the top ten were in-ground compressed air with 317 MW and 300 MW each.
Axion Power made the top 20 with two lead carbon battery projects at 12.5 MW and 9.1 MW.
Those you have convinced that saying energy storage is "a crowded field with lots of competitors and solutions" is an exaggeration and misleading might benefit from running a few searches on DOE's database site and not just limit them to the USA. Take a look at what's going on in the rest of the world and who all the players are. Tesla's business plan is to leverage its auto sales and service locations to market solar and battery storage products. That may be fine for residential buyers; but utility-scale and behind-the-meter industrial and commercial customers expect well engineered proposals adapted to their individual situations with convincing economics.
Meanwhile the main growth constraint for EVs is scaling up some 10TWh of annual battery production capacity. If other storage technologies can scale up for the grid market, this could free up GF capacity for automotive markets.
From the viewpoint of advancing sustainability, we want all these storage markets to be crowded with competitors. The more competitive these markets are, the cheaper and faster the transition will go.
for every short there is an "extra long". if many of those extra longs are long term holds, then you get the reaction you want. if many of those longs are smart funds trading an earnings beat, the reaction can be muted as shorts cover and longs sell. those reactions are hard to predict, what's easier is to size yourself so that you don't get pushed out before you want out.
Elon Musk telegraphed this one on April 3. Obviously, the big money and most of the bulls have received his message. The question is, did the shorts receive it, or are they about to take the knockout punch? We should find out today when short interest is posted.
fwiw, I posted a walk through of my valuation model here a couple of nights ago (a 2025/26 valuation of $1150-$1900 strictly on the core auto business and a conservative energy storage scenario). It's designed to allow people to use their own inputs if they like, and if anyone wants to share what I've posted elsewhere that's fine by me. I put a considerable amount of discussion and notes explaining my valuation approach and assumptions before and after the model, but, it's pretty easy to identify where the concise modeling walk through is if you want to skip to that part.
wow so add david einhorn to the list of tesla shorts. Tesla’s stock (TSLA) reaches new all-time high as shorts ‘feel the pain’
looks like he was short throughout the first quarter. not sure if they do risk management, but if they do likely they have left by now. if it were ackman, well we know he has no risk management other than a forced exit.
looks like he was short throughout the first quarter. not sure if they do risk management, but if they do likely they have left by now. if it were ackman, well we know he has no risk management other than a forced exit.
Einhorn was a speaker at Robinhood in december 2016, guess he bought into Spiegels short Tesla in the $180s presentation.
I of course always beleived the Model 3 would be profitable after the ramp-up. Though the question of course is when does the M3 turn profitable. Originally I would have figured that all M3 sold this year would be sold at razer thin margin or small loss. But the way they are talking about the rate of the ramp up and how much they managed to decontent the M3 I'm starting to believe that they might even be selling at a profit after the first few thousand cars. What do you guys think?
Cobos
I think they'll be selling the Model 3 with positive gross margin in Q4. Whether that's early in Q4 or late in Q4 is quite hard to say.
Einhorn's also a GM shareholder.
Hedge fund manager David Einhorn is settling in for a 'tough fight' with GM
Hedge fund manager David Einhorn is settling in for a 'tough fight' with GM
jesselivenomore
Member
First of all, thank you for all your work re: Q1 numbers, nci etc. It has been very helpful.
As for market reaction, that depends not only on the quality of the numbers, but also on the current state of the market.
For 2013 Q1, earnings also had dubious quality because they were only profitable due to zev credits. I'm sure the shorts harped on this at the time.
More recently in 2016 Q3, the earnings beat also included accumulating large amount of zev credits, in addition to pushing back accounts payable.
For both these instances you could pick apart the numbers if you really wanted to and question earnings quality, but the market had completely different reactions. (massive breakout in 2013, gap and fade in 2016) A big reason for this is because of the state of the market psyche during these times. In 2013, leading into the ER the stock had already rallied 50% above the all time high with no let up. The shorts who were all underwater were on the back of their heels and their resolve was fragile, while longs who were all in the profit were emboldened. The market was looking for an excuse to set off the powder keg. Meanwhile in 2016, leading up to the ER the stock was mired in a months long downtrend due to uncertainty with the SCTY acquisition. Sentiment was "irrational depression". I remember watching CNBC during this time, one of the guests said he was bullish TSLA and the host(Scott Wapner) literally had to do a double take, like "What, you're bullish??" This was because mainstream financial media at the time was so saturated with the Chanos and Andrew Lefts beating down on TSLA that it was a shock that anyone could actually be bullish the stock. I've never see such extreme sentiment on a stock that in essence was just trading flat for a couple years. You'd think that it was off 90% from its highs like VRX or something.
So back to the upcoming ER. Accounting for nci it looks like there will be a substantial nominal beat, but with questionable quality. But when you look at the state of the market psyche right now, what does it resemble more, 2013 or 2016?
In a bull market, the market ignores bad news and finds excuses to go up. In a bear market, the market ignores good news and finds excuses to go down. This is the case for individual stocks as well. In the long run, fundamentals rule. In the short run, its psychology. In the long run, 2017 Q1 earnings numbers are irrelevant whether it is a "real" beat or a manufactured beat. But in the short run, how the market interprets the numbers will be based on how it "feels", and it is currently feeling.. "stormy".
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sundaymorning
Active Member
Great post Jesse, can you expand on this and define "stormy"?
@jesselivenomore, have read your ta posts. great work.
i agree this is a bull market, as bullish a tape as you could hope for. but one thing we're missing vs. 2013 is any stock that has had a vicious reaction to an earnings beat. most of these large stocks are moving <10-15% on even great earnings numbers. in 2013 nflx lit up that earnings season with a pretty awesome move in january and another in april just before tesla's numbers. seeing that reaction had to put fear in the heart of the shorts. there's no such comparable high flying report this time (not yet). tesla could be **the one** but i'd rather not make that as a solitary bet.
i guess the real question is: are you playing may 5-19 calls, and if so what strike at what price? and what's your target if the eps comes in where i think it does?
i agree this is a bull market, as bullish a tape as you could hope for. but one thing we're missing vs. 2013 is any stock that has had a vicious reaction to an earnings beat. most of these large stocks are moving <10-15% on even great earnings numbers. in 2013 nflx lit up that earnings season with a pretty awesome move in january and another in april just before tesla's numbers. seeing that reaction had to put fear in the heart of the shorts. there's no such comparable high flying report this time (not yet). tesla could be **the one** but i'd rather not make that as a solitary bet.
i guess the real question is: are you playing may 5-19 calls, and if so what strike at what price? and what's your target if the eps comes in where i think it does?
jesselivenomore
Member
Shortsville, NY (14548) 10-Day Weather Forecast - The Weather Channel | Weather.com
Looks like chance of precipitation post May 3 is HIGH, with no let up in sight.
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