2017 Investor Roundtable: TSLA Market Action

[neroden]

The market makers in the options markets are different from the market makers in the stock.

The market markers in the stock *can't* hedge by trading the stock (think about it). They sometimes hedge by using the options markets. But they prefer to very strictly make their money off the spread. They try to avoid having a significant open position one way or the other ever. This is usually easy because liquidity on the NASDAQ is *huge* -- lots of real trading, unlike the thinly-traded options markets where over half the trades are probably with the market makers. So despite the huge amount of trading, the market maker in a stock can, if he's good at his job, typically end the day with NO position in the stock, every day.

If outside liquidity dries up on the stock and they're at risk of a one-sided position, the market makers on the stock will lower their bids and raise their asks (widen the spread) to protect themselves. I've seen that happen.

Options market makers differ because the options are much more thinly traded than the underlying stock, *and* the options market makers are trying to make money on time decay.

 

[MartinAustin]

For the US market, the Model 3 will eat BMW 3-Series for lunch - exactly like 7 series by Model S. That is a no-brainer for anyone, who invests 2 hours in studying Tesla

Heaven help those other lesser models in the segment... Lexus IS250... Infiniti G37... Acura TLX maybe even Audi A4/Porsche Cayman etc. etc. whose sales are probably already falling due to the Model 3 Preorder effect - there are less people walking around on dealership lots these days, as they have already out down their $1000 and have no interest in a new gasoline car. This is information the dealers, KBB, NADA etc. don't have - or haven't revealed yet.

Awesome day for TSLA today!

AND - did y'all see the ultra-bullish CNBC Fast Money segment on Tesla today? Wow... just WOW.

 

[elasalle]

What else to say but .. "it's Sunyville in Teslaville "

 

[dc_h]

My theory is that the short positions are being held by a sizeable number of idiots.

I think there are some sizable idiots with large short positions.

 

[MartinAustin]

A couple of quotes from Carter Worth, the chartist expert they brought on for the CNBC segment.

You can just stare at the party with your nose pressed up against the glass, wondering "how come I can't go in there?" or you can go in there and buy TSLA, just like AMZN or anything else. It's working. Let's do this: do I own it personally or have I at any point in the last five years? The answer is no. Which means, what a disaster!

and...

The hard thing to do is the right thing to do, and it's very hard to buy TSLA here [at $312]. It's hard to call up that friend and apologise, and say "you know what? I was wrong." Do you know how hard it is to buy TSLA? It's the right thing to do.

 

[neroden]

OK, what I take from this is that the momentum traders are just about to REALLY get into the stock.

 

[mickificki]

Is Tesla a must-own stock?

The CNBC Tesla segment. Crazy how bullish they are now.

Heaven help those other lesser models in the segment... Lexus IS250... Infiniti G37... Acura TLX maybe even Audi A4/Porsche Cayman etc. etc. whose sales are probably already falling due to the Model 3 Preorder effect - there are less people walking around on dealership lots these days, as they have already out down their $1000 and have no interest in a new gasoline car. This is information the dealers, KBB, NADA etc. don't have - or haven't revealed yet.

Awesome day for TSLA today!

AND - did y'all see the ultra-bullish CNBC Fast Money segment on Tesla today? Wow... just WOW.

 

[doctoxics]

I think there are some sizable idiots with large short positions.

One explanation for the seeming idiocy may be that the short positions are held by corporations whose business models are threatened by Tesla. They may be shorting TSLA to intentionally lower the stock price. The total of all of the shorts losses are a drop in the bucket for the energy and transportation companies that are being challenged by Tesla. That is, they have staying power, explaining what seems like idiocy.

 

[MartinAustin]

The CNBC Tesla segment

That's only six minutes of the huge fifteen-minute segment they spent talking about TSLA. Never seen them spend so much time on it.

 

[Opus BC fan]

How Tesla’s 'story' is driving its skyrocketing stock value

Here is the PBS Newshour discussion this evening. It still seems like they are missing the big picture.

 

[zdriver]

Is Tesla a must-own stock?

The CNBC Tesla segment. Crazy how bullish they are now.

"There's been a tailwind of positive news..."

Hasn't the bear argument since December been that the stock has been running up on nothing? (i.e. next to no positive news?)

 

[TrendTrader007]

A followup thought on this.



Suppose we're in danger of having a shortage of shares so that short-sellers can't cover their positions. If there are a lot of highly-leveraged concentrated longs, the brokerages can *force* more shares to be sold onto the market by raising the special margin maintenance requirements on TSLA, thus forcing heavily-leveraged longs to sell some of their stock. (If said longs are diversified, they could sell *other* stocks, of course, but if they're like 007, they can't.) This can be used to create enough liquidity for shorts to cover.

You're right! That actually happened to me and I ended up liquidating all my Tesla holdings

 

[AnneBoleyn]

If you don't see the relevance of Tolstoy's portrayal of Kutuzov against Napoleon in your assessment of Tesla, I believe you haven't read it enough.

First of all the moderator has closed the doors on philosophical reflections on this forum as of today, so save the pretentious recommendations for your Saturday night book club.
I believe the topic of discussion should be- those of us holding TSLA did very well today- and champagne all around!

 

[Yuri_G]

How Tesla’s 'story' is driving its skyrocketing stock value

Here is the PBS Newshour discussion this evening. It still seems like they are missing the big picture.

I like how their recollection of the "story" is never the reality that Tesla was selling almost no cars 5 years ago and now they are at a run rate of 100k per year. Bulls are optimists that can extrapolate and see the massive growth to be had in the near future.

 

[ValueAnalyst]

If $TSLA posts blow-out earnings (i.e. posts a profit and gives strong M3 guidance and/or TE guidance) then this is going to be a bloodbath. otherwise we will likely test ~$270 and fill some gaps. We're setting up for some heavy swings come earnings.

I expect the stock to rise above $400 by the earnings date. So you can say bye bye to those gaps...

 

[neroden]

One explanation for the seeming idiocy may be that the short positions are held by corporations whose business models are threatened by Tesla. They may be shorting TSLA to intentionally lower the stock price. The total of all of the shorts losses are a drop in the bucket for the energy and transportation companies that are being challenged by Tesla. That is, they have staying power, explaining what seems like idiocy.

Doubt it. If they're public corporations it would be considered mismanagement of the corporate funds so they couldn't do it. Maybe some very large private corporations might, but I expect it's hedge funds.

It might be hedge funds whose customers are all oilmen, of course.

 

[GoTslaGo]

Doubt it. If they're public corporations it would be considered mismanagement of the corporate funds so they couldn't do it. Maybe some very large private corporations might, but I expect it's hedge funds.

It might be hedge funds whose customers are all oilmen, of course.

Very well could be, wasn't there a recent meeting of Oil players INCLUDING Hedge funds? IIRC you guys talked about it in the hedging oil thread...

 

[TrendTrader007]

$TSLA real short covering will occur after a massive gap up which will likely be driven by Earnings related
A short squeeze is inevitable
riding daily weekly and monthly Bollingers a singular occurrence and excellent omen for further price appreciation similar to 2013
today it's likely to go up but better buying opportunity for small add on position might be tomorrow so I'm not buying any today
massive position in stock and calls so I'm not too crazy to buy relentlessly although clearly stock is just getting started
I promised myself that I will not chase $TSLS beyond $300 but I might do a small add on position on a pullback

 

[Reciprocity]

I like how their recollection of the "story" is never the reality that Tesla was selling almost no cars 5 years ago and now they are at a run rate of 100k per year. Bulls are optimists that can extrapolate and see the massive growth to be had in the near future.

As everyone is well aware of, much rides on the successful launch of the Model 3. Shorts are betting on failure and that money will run out before Tesla can figure out the issues. This differs from the S/X in that the Model 3, with its much lower price tag has less room for error. Tesla has compensated for this by simplifying the design. After about a quarter or two of deliveries and no major issues, the shorts are done. At 500k cars a year, this company would all but whip out the market share for cars competing with the Model 3, making those cars not profitable for the manufactures. If you add up the total sales of BMW 3 series, C Class Benz, Lexus IS and so on.. they dont add up to 500k cars per year. The S/X are already giving them headaches at higher end, the model 3 will decimate them. BMW has $53b market cap,and Daimler has $77b market cap? And pundits are complaining about Tesla valuation?

There is still a lot of risk, but this is a $77b+ valuation company in 9 months based on a successfully launch and ramp to 5k cars per week by the end of the year. Far from guaranteed, but they certainly have learned a lot from the last 5 years and they seem to be sparing to expense to make sure they have the engineering and automation expertise required to get the job done. GTLA

 

[Yggdrasill]

Doubt it. If they're public corporations it would be considered mismanagement of the corporate funds so they couldn't do it. Maybe some very large private corporations might, but I expect it's hedge funds.

It might be hedge funds whose customers are all oilmen, of course.

One data point: the fund Sissener Canopus recently started shorting TSLA. Only around 5 million USD, though.

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