2017 Investor Roundtable: TSLA Market Action

[racer26]

Tesla is a technology company dealing primarily with software, electronics, manufacturing and batteries; the company is far ahead of their competition in electric vehicles, battery energy storage and autonomous driving. Tesla makes the best cars ever made. Growth is at 50 % and is about to go to 70 % or higher. Tesla's addressable market is in excess of 10 trillion dollars. Any discussion of stock price, market cap, other valuations or comparisons with other companies must consider the above facts.

Emphasis mine: These things are not yet facts.

While I can appreciate the sentiment, superlatives don't help anything - 'best' is subjective.

Model 3, while the goal is to get close to 300% YoY gain in 2018 (~170k 2017 -> ~500k 2018), has yet to actually do that.

It's as if someone plugged a bunch of Powerpacks into TSLA and dampened the price fluctuations

Dampened? Explain to me why a high-beta like TSLA is down 0.5% while NASDAQ is up 0.25%? On a day we had a $25M order for a product negotiated in public over Twitter.

 

[MitchJi]

<snip>
Growth is at 50 % and is about to go to 70 % or higher. Tesla's addressable market is in excess of 10 trillion dollars. Any discussion of stock price, market cap, other valuations or comparisons with other companies must consider the above facts.

You mean that any intelligent discussion of stock price, market cap, other valuations or comparisons with other companies must should consider the above facts.

 

[Waiting4M3]

...Dampened? Explain to me why a high-beta like TSLA is down 0.5% while NASDAQ is up 0.25%? On a day we had a $25M order for a product negotiated in public over Twitter.

You know I meant the Powerpacks dampening TSLA price fluctuation as a joke right? But maybe whoever is running those Powerpacks used the beta AP2 AI code by mistake and the PPS is bouncing between the lane lines instead of following the center line on a curved road

 

[Time]

Hello! I made a post on 12/2/16 and 12/3/16 that I believe is worth a second look. Feel free to check my posting history for proof. I'm going to copy-paste it below. Hope you enjoy:

Longtime viewer of this forum (and others like it) chiming in here. Loving the extreme negativity that I've been seeing lately on here and just about everywhere else you could possibly look. Been following Tesla for almost a decade and I have to say, I don't think it has ever been like this in awhile.

I just want to extend my thanks to those who short the stock...

We wouldn't be here without you. You've funded this company's growth and I look forward to the future that you have helped create. Without the short squeezes that you perpetuated, that our wonderful CEO took advantage of, we wouldn't be here. Those billions of dollars of capital raises, at high share prices, that you helped support through your convictions against Tesla, provided the foundation for a company that will change the world over the next 20 years.

Without your bouts of panic, from $30 to $190, from $120 to $260, from $175 to $290, from $185 to $280, and from $135 to $270, Tesla would have billions of dollars less to build and fund their new production lines. Thank you for donating those funds to the cause.

As we stand now, with more than 30 million shares sold short, I thank you for once again proving that the market demand for shares of TSLA is far greater than the natural supply.

Sincerely,
A 6-Year Long Shareholder

 

[Time]

And here is the follow up that is worth reading from 12/3/16 that I posted:

Also...

We should welcome people like Mark Spiegel, Australian Man, Montana Skeptic, and others who display and spread the most extreme doubt about Tesla. While a normal display and level of doubt will just end up keeping potential investors away, an EXTREME display or level of doubt brings new people into the game...the kind of people that have a hidden value to long investors...

Recently, Spiegel shared with us the way he sees Tesla and it's shareholders. During his presentation to a crowd of investors (who paid to listen to him), he discussed Tesla shareholders as lemmings. While most investors makes decisions based on facts and figures and results, a person like Spiegel shows us that he makes decisions based on emotions and feelings. For him to share that with us was a gift...a glimpse into the clouded mind of a short seller...consumed by emotion, feelings and absolute certainty.

I personally believe one of the most important traits in life is being able to admit that you may be wrong. A great many longs understand this. We understand that past or present results may not be indicative of future results. We understand the risks and accept them. In my mind, many results are a coin flip - maybe I'll be right, maybe I'll be wrong - there are no guarantees. Risk is a natural part of investing, absolute certainty is not.

In Tesla short sellers, we see that important trait missing.

As Mr. Spiegel said, he feels that Tesla is a Zero. He (and others) feel, with absolute certainty, that there is an impossible amount of obstacles in front of Tesla and they will not overcome them. His emotions tell him that he is absolutely correct and his feelings tell him that he can not be wrong. He believes that it is all but certain that Tesla will fail. He sees absolutely no path forward for Tesla. In his mind, the future of Tesla is already set in stone. He sees no risks in his investment decisions.

To ignore the possibility of being wrong, to ignore risk, Mr. Spiegel (and other short sellers) fall into the trap of letting emotions override logical thought. I'm glad I'm not part of any group that believes that they can not be wrong. To be part of that group, would require surrendering logic and common sense, in the belief that emotion will lead them down a better path.

To be involved in the shorting of Tesla is to be part of a group of people who cannot see risk because of their emotions.

And a wise man once said, "Only when you combine sound intellect with emotional discipline, do you get rational behavior."

 

[Ulmo]

I don't think anybody that has their head screwed on straight will disagree with you that a valuation of approximately 40B has a certain amount of Model 3 and gigafactory success priced in. You're absolutely right that 3 years ago, when there was still significant risk that Model S might be a fad, Model X was being delayed and Model 3 nowhere to be seen, that being at this price was too much, and quite overpriced.

That being said - Tesla is currently selling somewhere in the neighborhood of 10B worth of cars per year with margins approaching 30%. A large portion of Tesla's present valuation is justified by that.

The thing is - once Model 3 and gigafactory prove their success, it's right on to the next thing. Model Y, Semi, Pickup, Minibus, Solar Roof and so on. All companies are priced with a certain expectation of future success built in. In Tesla's case, the roadmap to a wide array of products that virtually sell themselves is clear - quite a bit clearer actually, than most companies. We already know what the next 5 or 6 big projects coming down the pipeline are.

Remember - when we started building Model S 5 years ago, we expected to sell maybe 20,000 of them per year at full tilt. Tesla is now selling 3-4x that with sales still climbing. Imagine if initial estimates of demand for Model 3, or any of the other future models, are off by that much.

I mostly agree. Model S sales are kind of climbing. They can continue to climb, but they will struggle with competition, and Tesla will have to come back and improve the product quality and features. I think they will probably do that, but I have no crystal ball. But, Model S is not the only product. It is the other new products that will have the biggest updated effect on company value, in my opinion. Some of that is priced in and some is not. If I had stock, I'd be saying the same thing: that there is yet some Tesla Energy, Model 3, and possibly other (no guarantees) that can and probably will improve. Even if Model 3 is horribly delayed, the current stock price already has that pessimism mostly priced in, as well as a lack of awareness of Tesla Energy (if they ever ship in high numbers). I think the market's view of TSLA value could drop significantly from modest to major Model 3 delays and still recover from Tesla Energy movement, but I think Model 3 will only come a little bit late, and Tesla Energy will actually start to deliver a trickle of real product. I do hope for better. Then, next year, while everyone is non-plussed by Tesla's relative progress, everyone else in the EV and battery market will take off, and somebody will come take a look at TSLA and see that they have this here battery product and what do you know, they're selling some!

I think the battery market is growing, and there are competitive suppliers for that market. As long as the products from Gigafactory are good quality for price, that the market will not be saturated for a while.

 

[Waiting4M3]

I mostly agree. Model S sales are kind of climbing. They can continue to climb, but they will struggle with competition, and Tesla will have to come back and improve the product quality and features. I think they will probably do that, but I have no crystal ball. But, Model S is not the only product. It is the other new products that will have the biggest updated effect on company value, in my opinion. Some of that is priced in and some is not. If I had stock, I'd be saying the same thing: that there is yet some Tesla Energy, Model 3, and possibly other (no guarantees) that can and probably will improve. Even if Model 3 is horribly delayed, the current stock price already has that pessimism mostly priced in, as well as a lack of awareness of Tesla Energy (if they ever ship in high numbers). I think the market's view of TSLA value could drop significantly from modest to major Model 3 delays and still recover from Tesla Energy movement, but I think Model 3 will only come a little bit late, and Tesla Energy will actually start to deliver a trickle of real product. I do hope for better. Then, next year, while everyone is non-plussed by Tesla's relative progress, everyone else in the EV and battery market will take off, and somebody will come take a look at TSLA and see that they have this here battery product and what do you know, they're selling some!

I think the battery market is growing, and there are competitive suppliers for that market. As long as the products from Gigafactory are good quality for price, that the market will not be saturated for a while.

I've always found TE/GGF to be similar to Amazon's AWS. Powerwall/packs are so new that WallStreet doesn't know how to value it. And it's not something flashy like a pretty car that you can cruise around in, so it receives not much hype. But it provides infrastructural level competitive advantage to Tesla, and once it quietly cranks up (like an EV) and hits the balance sheet it will shock a lot of WallStreet people.

 

[doctoxics]

These things are not yet facts. While I can appreciate the sentiment, superlatives don't help anything - 'best' is subjective. Model 3, while the goal is to get close to 300% YoY gain in 2018 (~170k 2017 -> ~500k 2018), has yet to actually do that.

Every now and then, when Tesla longs feel the stock does not reflect the true value of the company, we have to step back and look at the incredible achievements and the growth that lies ahead. You can go ahead and discount these achievements and the growth they portend, but you will only end up serving the dark forces working against Tesla and the stock price. Going from 80,000 to 500,000 cars/year in two years is a 625 % increase. At 70 % per year the increase for two years would be from 80,000 to 230,000 cars/year. I shouldn't have to explain "best" for Tesla cars to a regular in Tesla Motors Club. Tests and reviews from all over the World support them as best ever made (and will only get better). Shouldn't we expect the Model 3 to be the best car ever made in its class? We should, based on what has gone before and what can be easily parsed by following Tesla events. The addressable market for Tesla products has been discussed numerous times on Tesla Motors Club. The 10 trillion dollar figure is likely an underestimate (just consider the vehicle manufacture and energy production industries).

 

[TrendTrader007]

$TSLA potential double bottom on 2 hourly chart? Will know by next week

 

[Dennisj00]

Shuussss. . . Don't tell everyone. . .

Edit -- didn't quote 3100 above!!

 

[racer26]

Every now and then, when Tesla longs feel the stock does not reflect the true value of the company, we have to step back and look at the incredible achievements and the growth that lies ahead. You can go ahead and discount these achievements and the growth they portend, but you will only end up serving the dark forces working against Tesla and the stock price. Going from 80,000 to 500,000 cars/year in two years is a 625 % increase. At 70 % per year the increase for two years would be from 80,000 to 230,000 cars/year. I shouldn't have to explain "best" for Tesla cars to a regular in Tesla Motors Club. Tests and reviews from all over the World support them as best ever made (and will only get better). Shouldn't we expect the Model 3 to be the best car ever made in its class? We should, based on what has gone before and what can be easily parsed by following Tesla events. The addressable market for Tesla products has been discussed numerous times on Tesla Motors Club. The 10 trillion dollar figure is likely an underestimate (just consider the vehicle manufacture and energy production industries).

I agree with you.

The Model S is the best car I've ever driven.

I expect the Model 3 to live up to the same standard.

Every other Tesla product working its way down the pipe are all no brainer type products, and I believe that they will make Tesla one of the first companies in the world to achieve a $1T market cap.

Just wanted to remind you that those are still opinions at this point, and have yet to prove themselves as facts.

 

[kenliles]

Nice pre market review of the entire exchange from WSJ

Tesla’s Musk Sets Sights on Australia—Via Twitter - The Wall Street Journal
Tesla’s Elon Musk Sets Sights on Australia—Via Twitter


Tweet power shows itself again

 

[MitchJi]

I agree with you.
1. The Model S is the best car I've ever driven.
2. I expect the Model 3 to live up to the same standard.
3. Every other Tesla product working its way down the pipe are all no brainer type products.
4. I believe that they will make Tesla one of the first companies in the world to achieve a $1T market cap.

Just wanted to remind you that those are still opinions at this point, and have yet to prove themselves as facts.

Correction, the last item (4) is still opinion, which has yet to be proven as a fact .

 

[vgrinshpun]

There were 1,079,451 shares available for shorting at Fidelity at 8:06am, the largest since I started consistently to keep records on 11/11/2016. It seems that Fidelity anticipates a lot of demand, as I think SP is at vulnerable spot and short sellers might be enticed to use this opportunity to trigger some further slide down.

 

[vgrinshpun]

Not much appetite for borrowing at Fidelity so far:

 

[1kEE]

And despite a weekends of positive tweeting and TE action, the low volume and lack of direction persists.... hmmm this has got to end eventually....

 

[vgrinshpun]

There still appear to be surprisingly low interest in shorting TSLA, in spite of the vulnerable spot the SP is currently is:

 

[racer26]

And despite a weekends of positive tweeting and TE action, the low volume and lack of direction persists.... hmmm this has got to end eventually....

Anybody have an explanation other than the market basically deciding to hold off on passing judgment on TSLA until cap raise is done?

 

[1kEE]

Anybody have an explanation other than the market basically deciding to hold off on passing judgment on TSLA until cap raise is done?

The people operating the algobots turn them off because they can't get a good read on the trend?

 

[TheTalkingMule]

If Mobileye is worth $15.3B, what is TSLA's autopilot worth?