Short-Term TSLA Price Movements - 2013

[Curt Renz]

I just now checked with my brokerage TD Ameritrade. TSLA shares are not available for shorting. No, I do not plan to short; I was just seeking information.

 

[CapitalistOppressor]

Let me put this another way. There was always an undercurrent of financial weakness in Tesla that made these stock prices feel elevated. That is a reason why I supported performing a secondary in luvb2b's thread.

That weakness is gone now. Tesla will be here, and be growing for years to come. $85 is a reasonable price in that context.

 

[surfside]

In connection with the offering of the notes, Tesla intends to enter into convertible note hedge transactions and warrant transactions which are generally expected to prevent dilution up to 100% over the offering stock price. In connection with establishing their initial hedge of the convertible note hedge and warrant transactions, the hedge counterparties or their affiliates expect to enter into various derivative transactions with respect to our common stock concurrently with or shortly after the pricing of the notes, including with certain investors in the notes.

Please someone explain this part to me?

in plain english, tesla is able to increase (by up to 100% -- or double) the share price at which convertible notes will be "in the money" (where the noteholders would be better off converting vs. getting redeemed); all this is achieved through a series of financial transactions that costs the company money today, but (in theory) should result in less dilution to the existing shareholders.

pretty sure i got this right; others feel free to chime in.

surfside

 

[kenliles]

I expect a strong move upwards tomorrow. I could obviously be wrong. I see no reason at all for this to cause a sharp fall though. This is a fundamentally good move and should get a good reaction.

Yes, we could easily see this effect on what are likely very large short positions taken out in the mid-$80's range. If the stock spikes tomorrow we could see a new squeeze in the following days. Hard to say though. I think the weak shorts are cleared out already, and the stock might not spike enough to break the new ones.

And keep in mind, we still have the SuperCharger announcement and (probably) the swap announcement over the next couple of weeks. I see no reason for the stock to be falling. Again, this is virgin territory, so who knows how things might turn, but all I see is up. If I wasn't fully invested already, I'd consider buying some at $85, and that wasn't the case for me earlier today.

ok thanks guys- I'll consider adding to long position; really having trouble converting to 300% rise due largely from short covering to all that's now valid for long. Even APPL didn't do this and they had easy relative scalability. Short term up I guess -
(but I will say, $11B valuation and reporting a loss next Q sits with me as a market mismatch and I can see why shorts are still hanging around while I carry my core long )

 

[CapitalistOppressor]

I just now checked with my brokerage TD Ameritrade. TSLA shares are not available for shorting. No, I do not plan to short; I was just seeking information.

Tsunami: Round 2?

 

[avatar]

I generally agree with CO. This recent news changes everything. We will never see TSLA go below $80 again. I'm going to put myself out there and make a prediction - we will see $130 this year.

 

[bhuwan]

I generally agree with CO. This recent news changes everything. We will never see TSLA go below $80 again. I'm going to put myself out there and make a prediction - we will see $130 this year.

is this a gut feeling ?

 

[CapitalistOppressor]

ok thanks guys- I'll consider adding to long position; really having trouble converting to 300% rise due largely from short covering to all that's now valid for long. Even APPL didn't do this and they had easy relative scalability. Short term up I guess -
(but I will say, $11B valuation and reporting a loss next Q sits with me as a market mismatch and I can see why shorts are still hanging around while I carry my core long )

Just be aware, I'm not necessarily expecting a huge move up. I do feel like we established a new floor though, and it wouldn't seem insane for the stock to push up into the $90's. It the same situation as with the last round in September. Tesla sold those at $28, and that gave me confidence in that as the new floor, because we know that the major investment houses will buy the stock at that price. Tesla spent the next 6 months trading between ~$28-$35 and basically never fell under the floor that was created.

That is along the lines of what I am expecting now at $85, but with the current psychology we could see it break much higher, especially if the swap announcement demonstrates an attractive feature for customers, while giving Tesla a potentially lucrative income stream.

 

[mitch672]

I generally agree with CO. This recent news changes everything. We will never see TSLA go below $80 again. I'm going to put myself out there and make a prediction - we will see $130 this year.

Or in a few weeks, the way things have been moving. Now where did I put those $110 calls...

 

[AudubonB]

Or in a few weeks, the way things have been moving. Now where did I put those $110 calls...

WAaaallllll...answer to that partly depends on whether you put them or called ​them....

 

[avatar]

is this a gut feeling ?

It is not a gut feeling. The data points available to us has changed. TSLA has wiped a major liability off their books and added to their cash position. This changes your fundamental analysis and discounted cashflow results.

PS: in the end everything is directional here. I think this piece of news is majorly positive. The likely outcome is for the stock to go up.

 

[CapitalistOppressor]

It is not a gut feeling. The data points available to us has changed. TSLA has wiped a major liability off their books and added to their cash position. This changes your fundamental analysis and discounted cashflow results.

PS: in the end everything is directional here. I think this piece of news is majorly positive. The likely outcome is for the stock to go up.

All of this. +1

- - - Updated - - -

If I have a hit product, $600m in cash and no debt, I am a happy, happy person.

- - - Updated - - -

And doing this at the expense of the shorts who were concerned about your balance sheet. Well played, Mr. Musk. Well played.

 

[bhuwan]

It is not a gut feeling. The data points available to us has changed. TSLA has wiped a major liability off their books and added to their cash position. This changes your fundamental analysis and discounted cashflow results.

PS: in the end everything is directional here. I think this piece of news is majorly positive. The likely outcome is for the stock to go up.

Thanks for the insight .

 

[kenliles]

Just be aware, I'm not necessarily expecting a huge move up. I do feel like we established a new floor though, and it wouldn't seem insane for the stock to push up into the $90's. It the same situation as with the last round in September. Tesla sold those at $28, and that gave me confidence in that as the new floor, because we know that the major investment houses will buy the stock at that price. Tesla spent the next 6 months trading between ~$28-$35 and basically never fell under the floor that was created.

That is along the lines of what I am expecting now at $85, but with the current psychology we could see it break much higher, especially if the swap announcement demonstrates an attractive feature for customers, while giving Tesla a potentially lucrative income stream.

yeah those are excellent points. and that seems to be the consensus (at least the short term effects); And I can agree, although-
$28-$35 was firmly established from long investment and for a long time (very few if any shorts had covered, only added); $85-$90 bears no resemblance - in fact the opposite - largely based on forced buying by those who specifically do not share the tesla vision. The unknown in my mind is how this 'artificial' level will support itself after this issuance- especially if it's purpose is to drive the price to force out the shorts. This puts more pressure on long investors in my view- If Tesla now cannot scale to the valuation (only supported currently by shorts) rapidly (shorts will not be a permanent force at these levels). It's certainly possible, but I see now a higher risk associated with the new floor- I was hoping to carry a lot of position for a long period of time, but I may need to carry a smaller long position now, to avoid the door in the floor. I'm of the persuasion this helps the short term price by adding a medium term risk. Elon sure makes things interesting

 

[marvinat0rz]

And doing this at the expense of the shorts who were concerned about your balance sheet. Well played, Mr. Musk. Well played.

Yes. This is the biggest metaphorical middle finger I have seen in a very long time. I actually laughed out loud when I realized what was up.

 

[CapitalistOppressor]

yeah those are excellent points. and that seems to be the consensus (at least the short term effects); And I can agree, although-
$28-$35 was firmly established from long investment and for a long time (very few if any shorts had covered, only added); $85-$90 bears no resemblance - in fact the opposite - largely based on forced buying by those who specifically do not share the tesla vision. The unknown in my mind is how this 'artificial' level will support itself after this issuance- especially if it's purpose is to drive the price to force out the shorts. This puts more pressure on long investors in my view- If Tesla now cannot scale to the valuation (only supported currently by shorts) rapidly (shorts will not be a permanent force at these levels). It's certainly possible, but I see now a higher risk associated with the new floor- I was hoping to carry a lot of position for a long period of time, but I may need to carry a smaller long position now, to avoid the door in the floor. I'm of the persuasion this helps the short term price by adding a medium term risk. Elon sure makes things interesting

It's not artificial anymore. Major investment houses just gave an $830m gold plated seal of approval to TSLA@$85. That isn't shorts frantically covering, or fanboys irrationally bidding the price up. This is the Wall Street establishment.

By itself it doesn't keep the stock from going down, but this demonstrates that the big players see Tesla as a value proposition at $85, so when the price falls below that these folks are likely seeing a discount and will be in a mood to buy. Conversely, if it gets too far above that they might see it as overpriced and will be in a mood to sell. That implies a substantial latent demand level @$85. Nothing concrete, but its still a major barrier IMHO.

It will take negative information to shift those expectations.

 

[surfside]

yeah those are excellent points. and that seems to be the consensus (at least the short term effects); And I can agree, although-
$28-$35 was firmly established from long investment and for a long time (very few if any shorts had covered, only added); $85-$90 bears no resemblance - in fact the opposite - largely based on forced buying by those who specifically do not share the tesla vision. The unknown in my mind is how this 'artificial' level will support itself after this issuance- especially if it's purpose is to drive the price to force out the shorts. This puts more pressure on long investors in my view- If Tesla now cannot scale to the valuation (only supported currently by shorts) rapidly (shorts will not be a permanent force at these levels). It's certainly possible, but I see now a higher risk associated with the new floor- I was hoping to carry a lot of position for a long period of time, but I may need to carry a smaller long position now, to avoid the door in the floor. I'm of the persuasion this helps the short term price by adding a medium term risk. Elon sure makes things interesting

this is where i disagree -- personally i don't think the purpose of this capital raise is to drive out the shorts -- i think the primary reason is to take advantage of the high current share price to raise capital and increase liquidity with marginal dilution, which is a great thing from a shareholder perspective.

surfside

 

[kenliles]

It's not artificial anymore. Major investment houses just gave an $830m gold plated seal of approval to TSLA@$85. ..... Nothing concrete, but its still a major barrier IMHO.

No, those are excellent valid points - it may be the shorts took us to where we should have been. I will say though, the path forward from this valuation will be hard fought. IMO we are back to needing flawless execution between now and 25% margin. The risk is definitely elevated after this parabolic move. Speaks to the confidence of Elon and team

 

[anticitizen13.7]

Pushing close to $92 in after hours. That's a substantial increase over last session's close. I wonder what is going on.

 

[kenliles]

this is where i disagree -- personally i don't think the purpose of this capital raise is to drive out the shorts -- i think the primary reason is to take advantage of the high current share price to raise capital and increase liquidity with marginal dilution, which is a great thing from a shareholder perspective.

surfside

yeah- I think I disagree on this one. I might agree it's a combination of both. I might even agree the source reason is to in fact raise the money while the price is high. The method though speaks to the underlying intent- punish the shorts. Replacing public debt with private debt, Elon paying 3 times the price, etc. The mechanics behind this deal really attack the short positions with a knife -