NigelM
Recovering Member
You guys need to visit other parts of TMC more often..... ;-)
Model-S-Buyers-What-s-Your-Income
The-Middle-Class-buying-the-majority-of-the-Model-S-s
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Short-Term TSLA Price Movements - 2013
- Thread starter Robert.Boston
- Start date
- Status
You guys need to visit other parts of TMC more often..... ;-)
Model-S-Buyers-What-s-Your-Income
The-Middle-Class-buying-the-majority-of-the-Model-S-s
Nigel, I didn't say majority, sorry if you inferred that from the term 'large category'. I'm glad you provided that link though to get some stats.
NigelM
Recovering Member
No need to apologize, of course I was having a little fun with you: nevertheless, the TMC subset of owners suggests it's very middle class and not "ultra wealthy". (Teslanaires excepted.... ;-))
Teslanaire and middle class are not always mutually exclusive. I have to be 55 before I can tap my tesla money w/o a 10% penalty. The middle class have rollover self-directed IRAs.
I think TSLAopt's point was that there are quite a few very wealthy people buying the Model S (whether that be a few percent of all owners or more), and they have resources to purchase the stock which many of them likely do. Ie, celebrities, business owners or executives who own the Model S. This definitely puts upward pressure on the stock over time IMO.
Here is my view:
Tesla kept creeping up slowly until it finally reached $145.85 on Monday prior to earnings. A lot of investors had a lot of belief in this company, and even after the GS inspired short attack the stock continued going up and hit a new ATH just a couple of weeks after falling 20%.
Going into Q2 investors were cautiously optimistic: Is Tesla really going to reach 25% gross margins and is demand sustainable? Q2 answered both of those questions - yes. This removed a couple of the biggest risks associated with TSLA. It helped eased some concerns.
Now there is all of this positive media around Tesla, European deliveries beginning that will lead to more orders and new TSLA investors, China debut coming in September?, and a hyperloop announcement coming this Monday. The stock is trading at 5% above the pre-earnings ATH.
Therefore, I ask what is the next logical step for TSLA to make? If people were investing in TSLA pre Q2, they should start piling in now after earnings. There is no reason for the stock to go down now. I think that TSLA will make another run in the short-run before finally settling down a little bit. Absent any bigger market correction, it makes absolutely no sense for TSLA to go back down to $140.
Tesla kept creeping up slowly until it finally reached $145.85 on Monday prior to earnings. A lot of investors had a lot of belief in this company, and even after the GS inspired short attack the stock continued going up and hit a new ATH just a couple of weeks after falling 20%.
Going into Q2 investors were cautiously optimistic: Is Tesla really going to reach 25% gross margins and is demand sustainable? Q2 answered both of those questions - yes. This removed a couple of the biggest risks associated with TSLA. It helped eased some concerns.
Now there is all of this positive media around Tesla, European deliveries beginning that will lead to more orders and new TSLA investors, China debut coming in September?, and a hyperloop announcement coming this Monday. The stock is trading at 5% above the pre-earnings ATH.
Therefore, I ask what is the next logical step for TSLA to make? If people were investing in TSLA pre Q2, they should start piling in now after earnings. There is no reason for the stock to go down now. I think that TSLA will make another run in the short-run before finally settling down a little bit. Absent any bigger market correction, it makes absolutely no sense for TSLA to go back down to $140.
Agree wholeheartedly. As Sleepyhead stated in one of his more recent posts, tsla is still in the early stages of its growth (I believe his exact words were we are in the 1st/2nd inning of the game) and has many, many years of growth ahead!
kevin99
Member
While most people on this forum tend to agree the long term direction where TSLA is going, it is a bit harder to predict the short term movement.
I see there are two extreme opinions here and like to contribute my thoughts.
sleepyhead, I think you represent one extreme: TSLA still have a lot more to go up on the daily basis. The basis of that is you take the $145.8 price run-up and states the current price of $153 is only like 5% advancement, not enough to reward a stellar Q2 ER. The weakness of this argument is whether the $145 pre-Q2 price already have part of earning surprise expectation factored in. Remember $145 pre-Q2 is the culmination of an incredible run of two weeks, after an remarkable recovery to $120 of the GS stunt from $108. So taking $145 as the base is definitely a extreme bull treatment. In all fairness, I see the retreat to $134 is much more reasonable pre-Q2, and we were handsomely rewarded by the 15% jump. At $153, it seems market is fair to both sides and did a pretty good job. Nobody can really complain it is unfair one way or the other.
Nevertheless, I am setting up my position for the Tesla Monday play. After that, I am open to hedge. As in my early post, unless some big negative news come out, the Tesla Monday effect has its legitimate reasons. It is not just a Jinx.
The other extreme is those who see no catalyst in sight and only downward pressure from here before Q3. So far, every time I have this view and start hedging, I get burned by the short calls that I wrote. I ended up making less gain overall. But it is not too bad as the time premium balance out better in a longer period of time. This time I will let the market tells me rather than pulling the trigger just because I feel the price is too high.
CyberDutchie
Active Member
I think the category of Tesla haters and skeptics is rapidly declining. Point in case is my work colleague who lives in Texas who has always been vehemently against Tesla because of the government subsidies, Obama, car for the 1%-ers, etc. Six months ago he was convinced that Tesla would go bankrupt. I stopped discussing the topic of Tesla with him because it would go nowhere.
Well, he has done a 180 on Tesla. The biggest thing for him was the repayment of the government loan. And I was the proof for him that the 1% argument doesn't hold--people who are not rich but willing to set aside substantial money for a car like the Model S, even at the point of being financially irresponsible. The fact that I took the risk and got the reward (car essentially paid for by TSLA gains) made him realize the idea wasn't that crazy after all.
The point of this is: the category of Tesla haters may be declining rapidly, and a percentage of them shorters may even become investors...:smile:
Volatility is bread by uncertainty. Huge uncertainty could mean that important catalysts in either direction are likely to emerge. It could also mean, and I think this is the case for Tesla, that there are too many unknowns to make even a decent ballpark valuation. Take a simple model of selling X GenIII vehicles in 2020, with a margin of Y% and a forward multiple of Z. For a positively inclined investor, X could be 200,000 or 500,000, Y could be 12,5% or 25%, and Z could be 30 or 100. That gives a bullish valuation range where the highest estimate is more than 16 times the lowest. This means that the day-to-day and month-to-month movements in share price are purely moved by sentiment (or momentum, or whatever you call it).
Quarterly reports do little to change people's valuation models. I do not think that any of us can say that the recently release report gave us data that enabled us to correct any previous estimates of X, Y or Z to any significant degree. The most important effect of quarterly reports on a stock like Tesla is that they affect sentiment, both in terms of the numbers and how well competent make management look. (The Q1 report was different, because there was a collective "oh $hit, they are really going to make it" moment in the market).
Going forward, the stock will keep being very volatile. Anything that affects sentiment will hit the stock. In a sense, stock price movements will reflect how everyone think that "the market" (i.e. everyone else) will react to any given development. That dynamic can lead to both bubble-like inflation and unwarranted collapse in a stock price. Personally, I think the latter is not likely as long as the market remains bullish. Only a bull market is willing to give so much "forward" valuation to a company as Tesla has now. [Note by the way that when I say "bubble-like", I don't mean "unwarranted", only that the catalyst for the appreciation of the stock is everyone's expectation of everyone else's behavior].
To summarize, I make the following claims:
1. Don't underestimate volatility going forward. Until we see the market's first reactions to GenIII, great uncertainty will remain about whether Tesla - in the bull case - will become a new Porsche or a new GM.
2. If the market stays bullish (a big "if", in my book), there could be a bubble-like inflation in the stock price ($200-300?).
3. If the market starts getting jittery, there could be a collapse to the $50-100 range.
If I am right, this is dangerous territory for almost any other strategy than simply buying to hold. Further, it means that buy-and-hold could soon require more stamina than hitherto, including being able to stomach a (presumably temporary) drop of up to 2/3 of today's value.
If you have a core investment of TSLA stock and the means to buy some more on a dip, you could consider a long-term covered straddle (an option-based strategy). That way, if the stock goes into a dip, then you end up buying more due to the puts (and the calls you wrote help pay for the purchase). If the stock keeps skyrocketing, you sell high and pocket the value of the puts in addition). This strategy is right if you think that the stock price is approximately right today.
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LOL. That reminds me of the old saying that the peak has been hit when the last pessimist turns optimist, and vice versa.
Quarterly reports do little to change people's valuation models. I do not think that any of us can say that the recently release report gave us data that enabled us to correct any previous estimates of X, Y or Z to any significant degree. The most important effect of quarterly reports on a stock like Tesla is that they affect sentiment, both in terms of the numbers and how well competent make management look. (The Q1 report was different, because there was a collective "oh $hit, they are really going to make it" moment in the market).
Going forward, the stock will keep being very volatile. Anything that affects sentiment will hit the stock. In a sense, stock price movements will reflect how everyone think that "the market" (i.e. everyone else) will react to any given development. That dynamic can lead to both bubble-like inflation and unwarranted collapse in a stock price. Personally, I think the latter is not likely as long as the market remains bullish. Only a bull market is willing to give so much "forward" valuation to a company as Tesla has now. [Note by the way that when I say "bubble-like", I don't mean "unwarranted", only that the catalyst for the appreciation of the stock is everyone's expectation of everyone else's behavior].
To summarize, I make the following claims:
1. Don't underestimate volatility going forward. Until we see the market's first reactions to GenIII, great uncertainty will remain about whether Tesla - in the bull case - will become a new Porsche or a new GM.
2. If the market stays bullish (a big "if", in my book), there could be a bubble-like inflation in the stock price ($200-300?).
3. If the market starts getting jittery, there could be a collapse to the $50-100 range.
If I am right, this is dangerous territory for almost any other strategy than simply buying to hold. Further, it means that buy-and-hold could soon require more stamina than hitherto, including being able to stomach a (presumably temporary) drop of up to 2/3 of today's value.
If you have a core investment of TSLA stock and the means to buy some more on a dip, you could consider a long-term covered straddle (an option-based strategy). That way, if the stock goes into a dip, then you end up buying more due to the puts (and the calls you wrote help pay for the purchase). If the stock keeps skyrocketing, you sell high and pocket the value of the puts in addition). This strategy is right if you think that the stock price is approximately right today.
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LOL. That reminds me of the old saying that the peak has been hit when the last pessimist turns optimist, and vice versa.
Sorry but I disagree. If you're making over 200k/yr you're not middle class. You're pretty damn well off.
I thought like this as well, and I still believe it on a larger, broad scale.
However, the 7/31 (settled) short interest published yesterday was quite surprising to me. I had expected the short interest to go down, especially considering I've been seeing naysayers/skeptics change their mind (ie., CNBC bears turned bulls). I would think that it would come to people's senses that TSLA is a strong stock/company and it just isn't worth it. Just take one look at the charts and you see this stock is in a very strong uptrend. Why fight it?
So, my current thoughts are:
1. I think generally in a broad sense (ie,. general public) people are warming up to Tesla and yes, there are less naysayers and haters.
BUT...
2. I think there still exists some very hard-core haters who are deeply offended at Tesla and who are driven by a deep ideology (ie., as deep as political, religious, etc. ideology can go). And among this movement, there could be some "leaders" and some coordinated efforts that we're not aware of. This can explain why the short interest is so high because the short interest is driven not completely by a broad, general-public hate/offense of Tesla, but rather the short interest is driven by some radical idealogues who are entrenched in deep money/hedge funds.
So, part of this "short TSLA" ideology could be that they sincerely believe Toyota, BMW, GM, Ford, VW, etc. are going to crush Tesla out of existence, and that as the stock goes higher it just means that there's that much more room to fall. When they publish their FUD on TSLA, they convince themselves that they are helping people to keep them from believing this crash-and-burn TSLA stock that will be obliterated when the big boys get serious about EVs.
Anyway, this all goes to say that while I agree with the general public warming up to Tesla, that there still exists the possibility that the extreme idealogues who are offended/hate TSLA and who drive the "short TSLA" movement are alive and well.
With these guys still around and very active (ie., coordinated short attacks, FUD, etc), I'm just not sure how I can construct a scenario where volatility rapidly declines... unless this "short TSLA" movement collapses as the extreme idealogues who lead this movement lose their credibility and followers, which definitely could happen but in that case we would have a rapid decline in short interest which would likely heavily affect the stock. In other words, volatility.
Also, before the "short TSLA" movement gives up it would make sense that they put on same brave last battles out of desperation, that could be the most intense ever. Think of war and right before a side gives up, they give it all they have. ... more volatility.
But I understand the other side that the stock seems to have risen so much and that this volatility (and epic rise) needs to come to an end sometime. I'm just not sure it's right now. In fact, I lean toward that we still have quite a ways to run... considering it's not just longs who are funding the TSLA rise but it's also the shorts who are contributing as well. More money to keep this epic rise going.
I'm also thinking we'll likely still have volatility and we'll see big rises and big falls (ie., 20% or more) and that we might see the AMAZiNG buying opportunities in the coming months. An example is during the Goldman Sachs dip, I bought Jan15 155 LEAPs for $17 and now they're $43. That's more than double in a few weeks time on a relatively low risk investment (chances are low that TSLA is not over $170 in 1.5 years). Usually it's very difficult to double your money in a few weeks without taking a ton of risk (risking losing it all on short-term options, etc). But I make a low-risk investment (mostly because it's in a regular account and I would need to pay short-term capital gains if I traded shorter term options) and I got a huge return. If TSLA goes to $300 in Jan15, those Jan15 155 calls will be worth $145 at least. Imagine, $17 to $145 in 1.5 years. Not bad at all. If I would have done shorter term options (ie., Sept OTM options), I probably would have made 6-7x my money by now (but would be liable for short-term capital gains).
So, I'm just saying if there's still volatility (thanks to the "short TSLA" movement that I think is still alive and well), then when there's a large dip (ie., 20% from ATH) I am considering that a huge buying opportunity. Low risk, huge reward. For the more bold, at a big dip (when the bottom feels like it is unending yet the company and economy hasn't changed and is still strong) I wonder what kind of gains one can get by selling puts and then buying calls. I would imagine one could make a killing if the stock recovers relatively quickly like it has in the past. But then again, there's the risk that it sits down there and recovers slower than you expected (or even drops further if the economy/market suddenly tanks). Oh, the joys of weighing risk vs reward. Anyway, again this is just my perspective... I'm not giving advice to others. I'm just sharing my thoughts in hopes to hear other people's feedback and stir more discussion.
On a side note, thanks to everyone taking time to share their thoughts, especially to those who are taking the time to explain their current thoughts in detail about how they assess TSLA's current price and forward possibilities. Shout out to sleepyhead, julian, kevin99, curt.renz, ongba, donpedro, convert2013, shortslaver, mulder1231 and to everyone else I missed for sharing your thought processes on how you're seeing TSLA at the moment. It doesn't matter if your bullish or bearish, to me the more we share the more we learn from each other and that improves how we approach this most-difficult topic of TSLA price movements. Cheers.
dmckinstry
Model X 2019
Sorry but I disagree. If you're making over 200k/yr you're not middle class. You're pretty damn well off.
I believe that Nigel's point is that a great many Model S buyers don't make over 200k/yr. I'm retired, and my annual income is more like 70k.
This year it's more like 150k, but that's because I took money out of my IRA to pay for my Model S.
Observations at the recent Stockholders meeting.
- A lot of youthful gray haired couples.
- Not very many Teslas in the parking lot (300 person room, maybe 20 cars)
- The vibe in the room seemed like not very many stock owners (like those at the microphones) were not car owners.
In the end the vitriol of the naysayers, and the passion of the true believers, will be reconciled by the test drives of the man in the middle. Take a friend on a test drive.
SebastianR
Active Member
I sure hope the same, but I'm not at all convinced about that. I worked too long in organizational change management to believe in your theory. Yes, some people may stop "hating" but I believe a lot of people will only soon begin to do the "hating". Don't underestimate the forces of disruption and what they will do. I predict a whole lot of workers / lobbyists / engineers / managers / politicians to officially start the hating very soon. Look at Hollywood and the Internet, look at companies like Uber and traditional taxi companies, look - of course - at the dealers and their fights against Tesla. Nobody wants to be disrupted and if Tesla become successful a whole lot of people will be disrupted and lose their jobs.
The problem is, that this will go very fast (by automobile standards) and will give people little time to adjust. Again, I hope that you are right and I'm wrong but I don't think there is any reason to believe that the hating is going to stop any time soon. (Ok, to present the counter thesis: The US loves 'Super Heroes' and Elon / Tesla fits the bill, so maybe public perception overall will be very good and only select groups will do the hating)
This piece:
Can Tesla Save This American Icon? (AA, TSLA)
mentions that Tesla makes 800 cars a week.
When Elon said that a few small suppliers cannot make more parts than they are currently making, maybe he meant 800 cars a week or even more. If 800/week is correct, and more sources repeat it, this may help TSLA shares grow in the near future.
Can Tesla Save This American Icon? (AA, TSLA)
mentions that Tesla makes 800 cars a week.
When Elon said that a few small suppliers cannot make more parts than they are currently making, maybe he meant 800 cars a week or even more. If 800/week is correct, and more sources repeat it, this may help TSLA shares grow in the near future.
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