2017 Investor Roundtable: TSLA Market Action

[neroden]

FYI:

CBOE Put/Call ratio took a jump to 0.96 (had been hovering between 0.55 to 0.75 for the past two months).

Woo-hoo, high demand for puts. The premiums should be rising, good time to sell more...

 

[ValueAnalyst]

I can not overemphasize the striking similarities between April 2013 and April 2017. I did not expect TSLA charts to follow the 2013 script so closely. but it is. I can't deny the obvious. I can't help but get increasingly bullish, more than I am, if that is possible.
I'll post comparison charts sometime over the weekend but suffice it to say that it is NOT looking good for the shorts. Somewhere on the not too distant horizon there is a perfect storm brewing and it's coming straight toward shortville
Shorts be scared. Be very scared

I'm looking forward to the comparison of April 2013 and April 2017 charts.

 

[neroden]

A trucker in the reddit thread telling me they can run non-stop with multiple drivers and the cost per mile goes down when they do so. The only way I can imagine that to be true is if the off-duty driver isn't paid, yet also is stuck in a truck instead of being at home free to enjoy one's non-paid hours.

Note that if they do it this way, you might as well have trucker #1 drive to the charging point, go off duty, have the truck charge for 2 to 4 hours by itself (with *nobody* getting paid), then have the next trucker go on duty and take the truck out... Each truckers could have a duty cycles shuttling back and forth between two charging points, sort of like train engineers typically go back and forth between two crew change points.

 

[ValueAnalyst]

Just received an email from Solar City that they are buying out bonds issued directly over the last three years. I had the ones due in Feb 2018. Just checked my account and they had deposited principal plus interest through Feb 2018.

I guess they are closing this bond program now.

This is very interesting. I wonder why they are doing this... Does anyone else have insight into this?

Someone suggested above that they must be getting better interest rate elsewhere. Not sure if this is the reason as Tesla is capital-constrained; otherwise they wouldn't be issuing equity.

 

[ValueAnalyst]

Can someone please ask Elon on Twitter when we will find out pricing for Tesla Roofs?

Walmart currently pays millions for every Electric Truck they use (if they are still using them?). If Tesla can produce a Electric Truck, even if it costs $500,000 - $1 million, it will be a bargain for large companies.

I suppose one potential way to bet the Tesla Truck will be huge would be to buy puts on Paccar Inc? Or maybe Paccar is working with Tesla? Thoughts?

Can you please provide support for "Walmart currently pays millions for every Electric Truck they use"

My understanding was that semi's were priced around ~$250k avg.

 

[ValueAnalyst]

A couple very separate thoughts.
1. I think it's obvious this move will not be the same magnitude of 2013, even if it is similar. Still, even if pointless, I wanted to see what the price movements would look like with today's prices and half the magnitude. This is them, based on prices leading up to the 2013 Q1 earnings and the week after. Not bad, and I think within the range of likelier possibilities at this point:

Date - Close
3/22/2013 - 278.06
3/25/2013 - 281.47
3/26/2013 - 282.71
3/27/2013 - 283.84
3/28/2013 - 282.82
4/1/2013 - 305.47
4/2/2013 - 307.01
4/3/2013 - 294.86
4/4/2013 - 298.27
4/5/2013 - 295.87
4/8/2013 - 297.60
4/9/2013 - 292.61
4/10/2013 - 297.71
4/11/2013 - 304.20
4/12/2013 - 304.80
4/15/2013 - 303.11
4/16/2013 - 311.70
4/17/2013 - 311.18
4/18/2013 - 316.88
4/19/2013 - 320.10
4/22/2013 - 328.95
4/23/2013 - 332.02
4/24/2013 - 329.85
4/25/2013 - 335.74
4/26/2013 - 332.74
4/29/2013 - 346.76
4/30/2013 - 343.20
5/1/2013 - 340.54
5/2/2013 - 343.65
5/3/2013 - 345.30
5/6/2013 - 363.86
5/7/2013 - 348.90
5/8/2013 - 349.95
5/9/2013 - 400.99
5/10/2013 - 428.59
5/13/2013 - 469.99
5/14/2013 - 452.89
5/15/2013 - 458.89
5/16/2013 - 486.67
5/17/2013 - 483.86

Could you please elaborate on "it's obvious that this move will not be the same magnitude of 2013"

It is not as obvious to me, and I'd love to hear your perspective and insight.

Thank you for the translation to today's prices; very informative.

 

[ValueAnalyst]

Does anyone else find it interesting that nothing was mentioned about the Model Y in today's tweet storm? It seems it would be ahead of the pickup and the semi. Makes me think more good news is on the way. What are the chances it's part of the Model 3 reveal in July?

I was surprised about that as well. I had modeled Model Y before the Semi, and I'm not sure if Tesla can bring both of them to the market by 2020.

But hey, it's never a good idea to underestimate Elon and his team.

 

[ValueAnalyst]

FYI:

CBOE Put/Call ratio took a jump to 0.96 (had been hovering between 0.55 to 0.75 for the past two months).

ISEE Call/Put is 105 (for equities), also getting low. Previously had hovered around the 160s-190s.

Both suggest a developing bearish sentiment, and typically implies potential buy signals for the market as a whole. And they are becoming synchronous, unlike before. Cut off >1.0-1.2 for CBOE, and <65-100 for ISEE.

Also AAII is 29% bullish (+0.7% from prev week), 33.6% neutral (+1.6%), and 37.4% bearish (-2.2%).

Can you see how this compares to April 2013?

 

[ValueAnalyst]

Note that if they do it this way, you might as well have trucker #1 drive to the charging point, go off duty, have the truck charge for 2 to 4 hours by itself (with *nobody* getting paid), then have the next trucker go on duty and take the truck out... Each truckers could have a duty cycles shuttling back and forth between two charging points, sort of like train engineers typically go back and forth between two crew change points.

I think it's more likely that they will go the battery-swap route or, less likely, have full-charged trucks ready to go at stations.

Lessening the workload for the driver is the most important thing in terms of savings. Financially this is more important than replacing fuel source. I wouldn't be surprised if Tesla moved quickly on this part of the equation.

Remember. The semi is next level. Next level.

 

[Reciprocity]

I think it's more likely that they will go the battery-swap route or, less likely, have full-charged trucks ready to go at stations.

What if this is what Elon meant in reference to 350kw charging stations being child's play. What if the semis has 4 125kwh packs that where completely independent and self contained. 2 packs for short hall and 4 packs for long hall with 700kw charging for each pack independently. Since they would be fully contained packs, they could be swapped as well, but I could see stations that could fuel 4 cars at a time or a single big rig.

Combined with autonomous platooning to increase uptime and efficiency and 20 minute charges, the trucks could stop more often. I just do not see Tesla building out 2 different infrastructures to support cars and trucks.

 

[Drax7]

Once we cross the demand "chasm" and enter the tornado demand phase, the firms market cap tends to
Balloon . The introduction of model 3 is likely to provoke that. We all know that.

However, In this instance we have the combination of a tornado and a massive short
Position which combined enhance the explosive nature of what can likely happen.

In my view once model 3 is in the show rooms, and the general public
Gets to see the car, the reservation numbers may well double, and
That may well be an iPhone moment. I doubt that is discounted at present
given the massive short position .

tornado + massive short = significant upward move.

Even if the tornado phase is presently discounted, the massive short interest
Will do the heavy lifting and provoke a substantial upward move.

 

[AnneBoleyn]

How common is it that a stock mimics almost identical patterns a few years apart?

Well pull up 2013 chart and compare to the current chart and see for yourself of course the price is not going to exactly be identical to 2013 but there are certain broad underlying themes and similarities that's all and if you do not think that it is similar to 2013 then do not act on that premise

 

[jbcarioca]

If you think about it from the point of view of the long term mission, Musk's goal is to prove that *all* transport can be done without fossil fuels. Accordingly, he's prioritizing going after the segments perceived as "difficult" by the rest of the world. He ignored city cars and went for long-distance travel; he ended the reputation of electric cars as "slow" or "small" by building supercars; next come the long-distance semi and the pickup truck, both segments being ignored by others. The segments seen as "easier" are already being done by someone else, so he doesn't have to do them personally. Probably.

Remember J B Straubel wanted to go straight to airplanes! But Musk said the tech wasn't ready for that yet. When it is, you can *expect* him to start a company to build an electric jumbo jet design.

What a great answer! As with many correct answers it seems obvious as in "yes, I knew that" but I did not. I'm sure you are correct. A pickup and a heavy truck fit perfectly. Now they just need to beat Airbus!

 

[Reciprocity]

If you think about it from the point of view of the long term mission, Musk's goal is to prove that *all* transport can be done without fossil fuels. Accordingly, he's prioritizing going after the segments perceived as "difficult" by the rest of the world.

Musk also does not care if someone else does it. He is only doing it because no one else will. I am sure he would be just as happy focusing a 100% on Spacex, but cant just ignore this need. I think I once read that you need 44 Gigafactories to build enough batteries so there is a ton of room for competition to make batteries for planes, trains and of course other autos.

At some point, in the not to distant future, other companies will pickup the baton and then stuff will change rather quickly.

 

[tinm]

Well pull up 2013 chart and compare to the current chart and see for yourself of course the price is not going to exactly be identical to 2013 but there are certain broad underlying themes and similarities that's all and if you do not think that it is similar to 2013 then do not act on that premise

One can only hope things are not *exactly* like they were in the spring of 2013: that was when Tesla was, what, a week from bankruptcy, even though the stock started soaring.

 

[jbcarioca]

?..

At some point, in the not to distant future, other companies will pickup the baton and then stuff will change rather quickly.

Many analysts seem to see a battery glut coming, just as there has been in solar protopholtaics. They surely miss the point, but they also cannot imagine widespread BEV adoption. They cannot see what is happening right now in much of Europe and China. They cannot understand how motivating severe organ pollution can be because they cannot remember 1960's New York and Tokyo, nor major Chinese cities today.

Ten years from today TSLA will be worth a multiple of today's values, or will have vanished. Global political will will be a major determining factor. TSLA makes good decision seem easy, because they will not be personally painful.

 

[Fifield]

Could you please elaborate on "it's obvious that this move will not be the same magnitude of 2013"

It is not as obvious to me, and I'd love to hear your perspective and insight.

Using historical valuations based on revenue and gross profit, both reported and projected, TSLA was trading in the 5th percentile of its expected trading range in 2013 and swung up into the 97th percentile. This time around TSLA would be moving from the 10th percentile into the 99th percentile of expected trading range after a move of equal magnitude (based on Q1 revenue of $3 billion, gross profit of $750 million, and steady annual growth rate of 50%).

Also, there is 10x capital needed to make a similar move this time around. What was a $5bn to 25bn move in market cap in 2013 would now be a 50bn to 250bn move. ~0.00003% of all available capital needed to flow to TSLA in 2013 to make that move, now it would be ~0.0003%; likelihood of making Xx moves over a given timeframe should decrease as market cap increases.

 

[ValueAnalyst]

Using historical valuations based on revenue and gross profit, both reported and projected, TSLA was trading in the 5th percentile of its expected trading range in 2013 and swung up into the 97th percentile. This time around TSLA would be moving from the 10th percentile into the 99th percentile of expected trading range after a move of equal magnitude (based on Q1 revenue of $3 billion, gross profit of $750 million, and steady annual growth rate of 50%).

Also, there is 10x capital needed to make a similar move this time around. What was a $5bn to 25bn move in market cap in 2013 would now be a 50bn to 250bn move. ~0.00003% of all available capital needed to flow to TSLA in 2013 to make that move, now it would be ~0.0003%; likelihood of making Xx moves over a given timeframe should decrease as market cap increases.

I like your methodology. Here's couple more factors I would suggest that you consider:

Tesla's revenue has the potential to rise by 20x from $7 billion in 2016 to $150 billion in 2020. This may seem unrealistic, but please consider the crucial announcement of "Gigafactories 3, 4, and possibly 5." Note that when April 2013 short-squeeze started, Tesla's TTM revenue was ~$1billon and it only went up to ~$4 billion in the subsequent two years, and I would venture to guess that future growth estimates were lower in April 2013 than 4x actual. I would also guess that investors now may have better confidence in Elon's projections than they did in April 2013. How would this affect your percentile analysis?

Instead of shares outstanding or market cap, you may want to look at shorted value ($10 billion) vs. float (which should exclude long-term investors like T. Rowe and Elon's shares), so the float is smaller than some sources indicate. How would this compare to April 2013?

 

[JRP3]

Does anyone else find it interesting that nothing was mentioned about the Model Y in today's tweet storm? It seems it would be ahead of the pickup and the semi. Makes me think more good news is on the way. What are the chances it's part of the Model 3 reveal in July?

Zero, if you believe what Elon has previously said.

 

[TrendTrader007]

I'm looking forward to the comparison of April 2013 and April 2017 charts.

I'll try to do it later tonight. The comparisons are simply too striking to ignore
Stockcharts.com has a RS rating system called SCTR and the SCTR for TSLA is exactly the same for both time periods 99.6
If I'm even half way right then between now and September/October 2017 TSLA is highy likely to mount a furious rally which could at the very least double the current SP to $600 or even higher like $750!
The biggest lottery ticket I hold is $400 $500 call options for 2018 and 2019
Others are more sedate like $250, 260, 290 and 300s for 18 and 19
5 times current SP is $1500 not going to happen
But 2 to 2.5 times is possible within next 6 months
But if there is a massive short squeeze then this stock could temporarily overshoot to $1000