2017 Investor Roundtable: TSLA Market Action

[Rarity]

My broker tells me there are not that many shares to short at the moment.

I don't believe it. Fidelity hasn't lent out my shares in months.

 

[ValueAnalyst]

I don't believe it. Fidelity hasn't lent out my shares in months.

All I see available to short at my broker, which is a large one, ~200-300k shares.

I wouldn't extrapolate if your shares aren't lent out. I know brokers follow a number of rules when picking which shares to lend out.

 

[ValueAnalyst]

Apple just got a permit to test autonomous vehicles in California.

 

[Rarity]

All I see available to short at my broker, which is a large one, ~200-300k shares.

As far as I can tell, those numbers only show the number of shares that your broker has made available to short. An important distinction.

For example, there have been several times over the last few months when Fidelity shows zero shares available to short, yet none of my shares have been lent out. Now, it's true that I could be end of the queue (the least profitable for Fidelity to lend out) for all of my shares and accounts, but past experience with the program suggests otherwise.

 

[Fifield]

Also - what is your second point?

Just a comment about the Tesla Semi announcement, it was moved to General Discussion: 2017 Investor Roundtable:General Discussion

 

[doctoxics]

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.

Seems Elon is underselling Model 3. Examples are Tesla not revealing the number of reservations (to avoid a panic to reserve?), delaying reveal to production in July, saying very little about performance (e.g., range). As you indicated, once we have the reveal and Model 3s in showrooms to drive, there may well be an explosion in reservations that will translate into an explosion in the stock price. Thinking September calls might be the right play here for money one can afford to lose.

 

[MitchJi]

Semi's mean five things:
1. Tesla-Elon have figured out a way that is cost effective to power huge trucks with batteries-electricity. That's huge! Since the MS was launched with an 85kwh battery pack no one else has caught up. How long before someone catches up with their semi?

2. It's a huge market. @DaveT has some excellent analysis that he or someone should post a link to. Tesla is going to disrupt that market. This isn't the link I was looking for but it's helpful:

efore going on, I have to say that I think the two big prizes in transport that are in possible reach for Tesla are ride-sharing and trucking. I don't think manufacturing is that sexy... it's too low margins and too high liability. If Tesla is going to succeed in a big way, they need to win in ride-sharing and/or trucking. The other big prize is energy. All three of these markets are trillion+ dollar markets, namely ride-sharing, trucking, energy.

3. They are not dependent upon autonomy to reduce the costs. Because even if they had full autonomy ready today they could not count in regulatory approval. That's a good thing, it means that their solution will get even more compelling over time.

4. It should be easier for them to dominate this market (smaller number of huge trucks), than thcars, because mainly they need to scale battery production. Which is a moat that Dave will like.
5. I think partly it's an extremely shrewd business move, but it's also a strategic move to improve the environment.

When the market figures out numbers 1 and 2 above the SP should rise.

Repeating myself this is huge!

 

[Intl Professor]

Someone show me a green number. <twitch>

5

 

[Waiting4M3]

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 don't think you can just look at the chart and not taking the events into account, otherwise it's no different from the shorts' "TSLA always comes back down to $180" message.

Looking at the events, in 2013 TSLA went up after seeing the MS ramp success in Q1'13. This is significantly different from what we're now, where the anticipation of M3 ramp is driving the PPS. Even if we have a good Q1ER on May 3rd, I suspect that the PPS will not explode like 2013, since a good Q1'17 is not immediately relevant to M3 launch, if may help in terms of cash to de-risk M3 ramp, but no more. If M3 launch is successful, I think a similar PPS move to May'13 would come in Q4'17.

 

[adiggs]

As far as I can tell, those numbers only show the number of shares that your broker has made available to short. An important distinction.

For example, there have been several times over the last few months when Fidelity shows zero shares available to short, yet none of my shares have been lent out. Now, it's true that I could be end of the queue (the least profitable for Fidelity to lend out) for all of my shares and accounts, but past experience with the program suggests otherwise.

This.

The number of shares that, for example, Fidelity indicates are available in no way indicates the total number of shares that Fidelity can make available. To make more shares available, Fidelity would raise the rate they are charging to say 2% and borrow me and @Rarity's shares at 1% and start earning the spread (and all of the rest of the fully owned shares at Fidelity in the Fully Paid Lending Program that aren't currently borrowed, but can be).

 

[ValueAnalyst]

Semi's mean five things:
1. Tesla-Elon have figured out a way that is cost effective to power huge trucks with batteries-electricity. That's huge! Since the MS was launched with an 85kwh battery pack no one else has caught up. How long before someone catches up with their semi?

2. It's a huge market. @DaveT has some excellent analysis that he or someone should post a link to. Tesla is going to disrupt that market. This isn't the link I was looking for but it's helpful:


3. They are not dependent upon autonomy to reduce the costs. Because even if they had full autonomy ready today they could not count in regulatory approval. That's a good thing, it means that their solution will get even more compelling over time.

4. It should be easier for them to dominate this market (smaller number of huge trucks), than thcars, because mainly they need to scale battery production. Which is a moat that Dave will like!
5. I think partly it's an extremely shrewd business move, but it's also a strategic move to improve the environment.

When the market figures out numbers 1 and 2 above the SP should rise.

Repeating myself this is huge!

I agree with everything you said except for one:

I'm not sure if it'll be easier to disrupt the trucking market than cars. Trucking is a commercial industry in which decisions may be influenced by established relationships vs. a consumer market such as cars. Remember Apple's struggles in the enterprise market and Steve Jobs' words about the difference between the decision-makers in the enterprise vs. consumer markets?

Since Tesla Semi is unlikely to come to market until 2019/20, I would expect the regulatory approval for autonomous driving to follow shortly thereafter. Model 3 may speed up the regulatory process.

Cutting down fuel cost to half is nice, but taking out the driver cost would be huge. Remember, Tesla Semi will be "next level."

 

[1kEE]

No ticker to look at. .twitch.

Someone show me a green number. <twitch>

I thought I was the only addict that was going through market withdrawals today hahaha. Let's see if geopolitical stuff blows up over the weekend...

 

[Paracelsus]

With the semi and pickup unveiling closer than anyone thought they would be I wonder if there has actually been some beta testing on the roads with either product yet. Here we were all hoping to catch the next photo of a Model 3 on the road and we might have been only a few lanes away from an electric semi. If they put a couple exhaust pipes on it with fake black smoke rolling out who would bother to look twice if it didn't have a cool logo on the box?

 

[MitchJi]

I agree with everything you said except for one:

I'm not sure if it'll be easier to disrupt the trucking market than cars. Trucking is a commercial industry in which decisions may be influenced by established relationships vs. a consumer market such as cars. Remember Apple's struggles in the enterprise market and Steve Jobs' words about the difference between the decision-makers in the enterprise vs. consumer markets?

The reason I said that is because I believe that it will be easier for them to ramp production. I believe that (Elon said cost less and fun) that their only limitation will be production. Relatively easy to produce trucks, batteries will be the limitation. I believe that both trucking companies and independents will jump at the chance to reduce fuel costs.

I would expect the regulatory approval for autonomous driving to follow shortly thereafter. Model 3 may speed up the regulatory process.

Elon said about five years for regulatory approval. It's a little refreshing to see that someone believes that Elon's schedule is extremely conservative!

Since Tesla Semi is unlikely to come to market until 2019/20,

I think it's end of 2018 to early 2019. Mainly it's going to come down to how many batteries that they can produce. Now that they have completed the first large scale anode and cathode production lines they can build Gigafactories a lot faster and for less money.

Cutting down fuel cost to half is nice, but taking out the driver cost would be huge. Remember, Tesla Semi will be "next level."

Agreed.

 

[Turing]

So my wednesday evening chart review turned out to be pretty accurate, although maybe only thanks to Elon's tweets. We had a similar pattern last march 21-23.

 

[TrendTrader007]

I don't think you can just look at the chart and not taking the events into account, otherwise it's no different from the shorts' "TSLA always comes back down to $180" message.

Looking at the events, in 2013 TSLA went up after seeing the MS ramp success in Q1'13. This is significantly different from what we're now, where the anticipation of M3 ramp is driving the PPS. Even if we have a good Q1ER on May 3rd, I suspect that the PPS will not explode like 2013, since a good Q1'17 is not immediately relevant to M3 launch, if may help in terms of cash to de-risk M3 ramp, but no more. If M3 launch is successful, I think a similar PPS move to May'13 would come in Q4'17.

It seems to me that the number of catalyst in 2017 probably higher than in 2013 I do not know for sure since I was not a shareholder in early 2013 but Tesla seems to have plenty of positive surprises in store to propel the stock higher
Things like tesla energy tesla semi reveal talk about model Y solar roofs probable positive impact of solar city to bottom line I some of the things I can think of right away
Plus don't forget the impressive short interest in the Stock despite a $50 billion market Cap i do not know if any company like Tsla which is $50 billion market cap And so heavily shorted that itself could prove to be a major catalyst in its own right
Also the most surprising thing about the stock market is that patterns are never exactly the same and when people least expect something to happen that is when it happens so I ask myself what is the least expected probability in 2017 and the least expected probability to my mind is an almost repeat of 2013 pattern so while I do not expect an exact repeat but the underlying theme could be quite similar as far as magnitude of move is concerned as well as the timeframe
I could even make a case for this outcome from a contrarian standpoint

 

[dw4ngg]

It seems to me that the number of catalyst in 2017 probably higher than in 2013 I do not know for sure since I was not a shareholder in early 2013 but Tesla seems to have plenty of positive surprises in store to propel the stock higher
Things like tesla energy tesla semi reveal talk about model Y solar roofs probable positive impact of solar city to bottom line I some of the things I can think of right away
Plus don't forget the impressive short interest in the Stock despite a $50 billion market Cap i do not know if any company like Tsla which is $50 billion market cap And so heavily shorted that itself could prove to be a major catalyst in its own right
Also the most surprising thing about the stock market is that patterns are never exactly the same and when people least expect something to happen that is when it happens so I ask myself what is the least expected probability in 2017 and the least expected probability to my mind is an almost repeat of 2013 pattern so while I do not expect an exact repeat but the underlying theme could be quite similar as far as magnitude of move is concerned as well as the timeframe
I could even make a case for this outcome from a contrarian standpoint

The flaw with your theory is that what you don't expect to happen will inevitably evolve over time as the unexpected slowly becomes the expected by virtue of you thinking about it so many times...

In fact, the true unexpected would be a 50% drop or something like that.

 

[AndresBM]

These are the "Solar Bonds"? Yeah, they already stopped issuing new ones. I'm a little surprised they're buying out the ones which are not due until 2018, but I guess they are getting a better interest rate somewhere else.

Better interest rate? As long as I understand they are paying all future interests... Very bad deal if they need to then reissue debt. It only makes sense if some debt ratio is necessary for SolarCity, as discussed in the other thread, which doesn´t seem good.

Or more probably, the problems come from SpaceX as it has a large part of the bonds. There is a big conflict of interest there, as he deal is very favorable for SpaceX.

Besides, the timing. Truck announcement, longer weekend to digest the news... And Kimbal Musk selling shares... I am looking forward to seethe explanation in the Q1 report.

 

[GoTslaGo]

And Kimbal Musk selling shares...

Drink!

 

[TrendTrader007]

The flaw with your theory is that what you don't expect to happen will inevitably evolve over time as the unexpected slowly becomes the expected by virtue of you thinking about it so many times...

In fact, the true unexpected would be a 50% drop or something like that.

Good enough