Short-Term TSLA Price Movements - 2014

[Curt Renz]

That's the wording he used, at least that's how it stuck in my mind. He obviously meant "production constrained."

Even if I got the wording wrong, the gist of his argument was that Tesla will not meet guidance and it will be time to short it.

Both of those TSLA bears on CNBC this morning repeatedly said "demand constrained". Of course Musk actually said production (supply) constrained. The reduced deliveries that the hedge fund manager harped on are due to a two-week retooling to set up a second assembly line, and cars traversing oceans. Musk has said he can increase demand at anytime, but that would only increase the backlog while production constrained.

This is a company that does not advertise due to production constraint. Here in Illinois folks are either unaware or vaguely aware of Tesla Motors and the Model S. Financial news junkies know about them, but most people do not follow the financial news. Once production gets ramped up to the point that justifies advertising, look for demand to explode upward.

The short sellers cannot envision the entire forest while focusing on only the nearby trees that appear to justify their opinions. The market is largely pricing the stock based on long term potential and not near term quarterly figures. The short sellers are fooling only themselves when they apply the fundamental analysis for established companies that they learned in college, rather than considering how a dynamic growth company managed by visionaries can completely disrupt several major industries. The goal of financial analysis should be to predict what people will be willing to pay for a stock during the coming weeks, months and years, and not to tell people what a relatively simple methodology says they should be paying today.

 

[FredTMC]

The video is up. He does use the expression "demand constrained environment." His name is John Fichthorn, of Dialectic Capital Management.

I watched vid and really got pissed at CNBC for allowing this guy to spew his FUD without anyone countering his arguments. CNBC, shame on you!

 

[The Blue Owl]

I watched vid and really got pissed at CNBC for allowing this guy to spew his FUD without anyone countering his arguments. CNBC, shame on you!

No, this is perfect! Between this and Bloomberg TV, we are getting a perfect setup for Q4. So I'm asking again: what options would you trade and when?

 

[Jonathan Hewitt]

No, this is perfect! Between this and Bloomberg TV, we are getting a perfect setup for Q4. So I'm asking again: what options would you trade and when?

All of them! Well, all the calls at least, (sell the puts...)

On a serious note Q4 is quite a ways away from now so personally I wouldn't be buying for a Q4 play quite yet. A lot could happen between now and then.

 

[Causalien]

I am waiting for a bigger short attack as I do not expect TSLA to levitatate to $300 by swimming in its own marinating sauce. we got from now till October to hear about Q3 and the subsequent piercing of the $300 level. There's plenty of time to organize a bunch of events. It's timing them to the same week that's hard.

Once it happens, it will be a delayed call spread from the low of the short attack to $320 with put buying when price reach $300.

 

[jhm]

Wow, this guy really doesn't learn. @jhm, your comparison is unfair to dogs.

Ah, you got me. Actually, dogs are great. What pisses me off are people who abuse dogs. These shorts are not content to simply make their bet and live with it. Rather they spew out this sort of nonsense to incite others to buy puts so that their short position does not suffer. This is an abuse of retail investors. Guys like this will cover their shorts while put-holders are left holding the bag.

 

[bsd]

Ah, you got me. Actually, dogs are great. What pisses me off are people who abuse dogs. These shorts are not content to simply make their bet and live with it. Rather they spew out this sort of nonsense to incite others to buy puts so that their short position does not suffer. This is an abuse of retail investors. Guys like this will cover their shorts while put-holders are left holding the bag.

Do these fund managers buy puts rather than shorting actual shares?

(Selling puts would then be a good way to take advantage of them; I wonder what expiry they look for?)

 

[Twiddler]

It is amazing that the bears are still trying to use the decreasing demand argument, even after Elon stated as clearly as he possibly could that Tesla is SUPPLY CONSTRAINED, and suggested that he did not know how to phrase it any more clearly. This past week, CNBC has really shown its true colors. I really hope that the viewing public is taking note.

 

[jhm]

Do these fund managers buy puts rather than shorting actual shares?

(Selling puts would then be a good way to take advantage of them; I wonder what expiry they look for?)

I'm not sure it matters. If they are short shares, they can neutralize their position by selling puts and make money on the spread. They just need to drum up enough retail demand for puts to make money off of this.

 

[austinEV]

I find this sort of pervasive misinformation comforting. It just shows that TSLA's best days are still ahead. There are still a lot of people who need to learn and understand the business, and when they do they will become net buyers. Just as the TM has not begun to tap the addressable market for it's cars, so too have we not begun to address the total market for the stock. The day all the TV pundits totally understand TSLA and it's products and value proposition it will be $800/share.

 

[chickensevil]

Sorry, actually had to pull myself away from this for a while for actual work

I know this is probably mostly about defining terms, but it helps me to focus on the long-term quality of the asset/company over time and to realize a "bubble" is more about the quality of the asset/company not living up to exuberant expectations.

Yeah, I was defining the terms as they usually mean them relating to "the bubble popping" and it's association with the dot com bubble, because that is how it is almost always referenced and talked about when people are trying to drum up support on the short side.

Chicken, perhaps I am the last person on earth to have realized this, but it is only in reading your post No. 6356 that I finally noticed that delicious, ironic double entendre that is "short-sighted".

That. is. Amazing! Entirely unintentional, but I will take it

No, this is perfect! Between this and Bloomberg TV, we are getting a perfect setup for Q4. So I'm asking again: what options would you trade and when?

Something I will caution as I try to keep a cautionary side about things to ensure we are all considering every side and not getting ahead of ourselves here... Be mindful of how Q3 results are likely to shape up. Based on the thread DaveT started about the upcoming results for this current quarter and trying to figure out where we will sit... the EPS is not going to be very pretty this time around. DaveT had to put up some pretty generous numbers while staying within the confines of what management guided in order to arrive at even .01$ EPS.

Now, I don't say this to suggest anything is wrong with Tesla, or that the story has changed. Long term things will still play out, and if we get some other really good news between now and ER, or even DURING the ER, it will likely make up for any hit we would take if they actually post a negative EPS (which is entirely possible). Maybe I am seeing this wrong, which I hope I am, but I actually was cautious coming out of Q1 ER, and especially thought the stock was going to decline when there was no real substance to the Gigafactory like everyone was hoping that following week. Their guidance of being barely positive for Q2 and all of that, and I believe I had said something then... I know I said it somewhere... don't recall where...

Short term (<1 Month) I can see us breaking out of the 265s and hitting 275+, Medium term outside of amazing news, I fear that we will see a drop again. And then of course Q4 will be an absolute blowout. So if you want to try to time something prep yourself for the build up into Q4 ER because that will likely be the one to solidify to any doubters Tesla's capability to execute a larger number of production and delivery. Just my two cents...

 

[The Blue Owl]

So if you want to try to time something prep yourself for the build up into Q4 ER because that will likely be the one to solidify to any doubters Tesla's capability to execute a larger number of production and delivery. Just my two cents...

That's what I said all along, including in the post you quoted.

 

[SBenson]

No, this is perfect! Between this and Bloomberg TV, we are getting a perfect setup for Q4. So I'm asking again: what options would you trade and when?

Two ideas come to my mind


1) I usually like reactionary strategies than proactive ones, especially entering into a trade. And I like to be conservative, relatively speaking.
I suspect stock will most likely fall post Q3 ER. If it does, time to buy up some LEAPs. If a squeeze happens at Q4 ER, use that opportunity to sell. If a squeeze doesn't happen, LEAPs still won't hurt. Over the course of time there are many upcoming catalysts X-launch, doubling of production, Model3 unveil early 2016 etc.
I like LEAPS better as time decay will be lot lower than short dated calls during the three month period. And of course, there is protection of time. As long as you enter in an opportunistic way, when the stock takes a beating, this should pay off.


2) Wait for the day of Q4 ER, (depending on where the price is) buy weekly call options.

 

[chickensevil]

That's what I said all along, including in the post you quoted.

Sorry, I was just quoting your's because it seemed to be the last in the conversation (maybe I picked the wrong one to quote?) I was just trying to continue that line of thinking of what to trade and when, by suggesting that Q3 is certainly a very questionable quarter to be making trades... I don't think anyone contests that Q4 is going to be amazing (at least at this point) but Q3 has a lot of uncertainties to it.

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Two ideas come to my mind


1) I usually like reactionary strategies than proactive ones, especially entering into a trade. And I like to be conservative, relatively speaking.
I suspect stock will most likely fall post Q3 ER. If it does, time to buy up some LEAPs. If a squeeze happens at Q4 ER, use that opportunity to sell. If a squeeze doesn't happen, LEAPs still won't hurt. Over the course of time there are many upcoming catalysts X-launch, doubling of production, Model3 unveil early 2016 etc.
I like LEAPS better as time decay will be lot lower than short dated calls during the three month period. And of course, there is protection of time. As long as you enter in an opportunistic way, when the stock takes a beating, this should pay off.


2) Wait for the day of Q4 ER, (depending on where the price is) buy weekly call options.

And I am really glad that I am not the only one seeing a drop in the future for Q3 ER.

 

[jhm]

Wow, the FUD machine at Seeking Alpha has taken to calling Tesla the "fairest welfare queen of all." The shorts must be dreadfully desperate to stoop that low. Right wing hate speak will not save their asses.

 

[The Blue Owl]

Two ideas come to my mind


1) I usually like reactionary strategies than proactive ones, especially entering into a trade. And I like to be conservative, relatively speaking.
I suspect stock will most likely fall post Q3 ER. If it does, time to buy up some LEAPs. If a squeeze happens at Q4 ER, use that opportunity to sell. If a squeeze doesn't happen, LEAPs still won't hurt. Over the course of time there are many upcoming catalysts X-launch, doubling of production, Model3 unveil early 2016 etc.
I like LEAPS better as time decay will be lot lower than short dated calls during the three month period. And of course, there is protection of time. As long as you enter in an opportunistic way, when the stock takes a beating, this should pay off.


2) Wait for the day of Q4 ER, (depending on where the price is) buy weekly call options.

I like number 1). I, too, think a drop post-Q3 is likely, and the "demand is falling" canard to reach paroxysm after low-ish deliveries (nevermind they're pre-announced, nobody reads earnings reports these days, it seems). That would make it a perfect bear trap, given Q4.

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Sorry, I was just quoting your's because it seemed to be the last in the conversation (maybe I picked the wrong one to quote?) I was just trying to continue that line of thinking of what to trade and when, by suggesting that Q3 is certainly a very questionable quarter to be making trades... I don't think anyone contests that Q4 is going to be amazing (at least at this point) but Q3 has a lot of uncertainties to it.

Right, I get it now.

 

[chickensevil]

Well, reputation all around then! Cause I am really happy that I seem to be reading the same tea leaves that you guys are

Which also helps, because I fully plan to leverage this bear trap to my advantage, since I have been trying to put together some new money in order to play with options, I might just hold out at this point for that timing to attempt to maximise my chances of making my first option trade not a total waste of money

 

[Chickenlittle]

I like number 1). I, too, think a drop post-Q3 is likely, and the "demand is falling" canard to reach paroxysm after low-ish deliveries (nevermind they're pre-announced, nobody reads earnings reports these days, it seems). That would make it a perfect bear trap, given Q4.

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Right, I get it now.

i disagree. Model x on road, pricing release choice of giga factory other partners and low delivery priced in can easily be beaten. All this would make it dangerous to back down then

 

[The Blue Owl]

i disagree. Model x on road, pricing release choice of giga factory other partners and low delivery priced in can easily be beaten. All this would make it dangerous to back down then

I wasn't thinking of backing down, rather load on 2017 LEAPS on a pullback, if it materializes.

 

[AlMc]

i disagree. Model x on road, pricing release choice of giga factory other partners and low delivery priced in can easily be beaten. All this would make it dangerous to back down then

The great (stressful) thing about investing is that the exact opposite may happen. TM could exceed Q3 guidance greatly as they have a number of cars in the pipeline that they could try to 'push' to empty by Sept 30th. Mix in some ZEV credits, unveiling the model X, more definitive GF news and Q3ER could be a big surprise.