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chickensevil
Active Member
Welcome back, They will certainly show up in the balance sheets, unfortunately it will be hard to back out the other values that are in those balances. That is, Model X reservations, Model S reservations, probably even Powerwall/Powerpack reservations (has anyone even though of that one yet?). And unfortunately it is anyone's guess how many "fully paid" cars end up in that number of people who paid in full right at the end of the quarter, but won't take delivery until day 1 or 2 of the new one. We also don't know how many cars are "in transit" to China which would have the higher fees for paying out the import dues/taxes. And then of course we don't know the lingering number of signatures on deposit (40k per) and the lingering number of normal MX deposits (5k)... At best we can guess the current number of Model S orders based on some math between assumed production and the delay in wait times, but this is getting harder and harder to do as their numbers go up, and dates don't remain consistent.
It would take a serious jump in the numbers for us to definitively state that this is from Model 3 impact. At 1k per deposit unless the number is something crazy like 500k reservations it might be hard for us to see that jump and say with certainty that is from Model 3 deposits alone.
Of course at that point, if Tesla has that many deposits, I am sure they would tell everyone about it anyway just to rub it in that they got 500k deposits, so no reading between the lines needed on figuring it out.
Welcome back Julian.
Sorry to start off this way, but I must quibble with this thesis. It's self-contradictory.
I've argued with Mark Spiegel long enough to know that the professional shorts won't cover as the stock rises into Q3. If it rises quickly, they'll just add to their short position rather than close out on a loss. Fidelity and other large institutional shareholders would be more than willing to loan shares for them to short. So that trade balances itself out. Strong longs (and shorts) will not impact the share price as they won't trade much. No, the shares will ONLY rise when more new longs waiting on the sidelines buy in. With Jan '16 still fresh in their memories and a capital raise imminent (as you're predicting), there will be no short-squeeze into Q3.
it's ok - and I see no quibble here. You have described perfectly the term I used. Rolling Short Squeze.
You're right, hardened idiots like Spiegel will not cover or capitulate, they will just double down on stupid at higher Strike prices as the stock rises. Hence the rolling multiplier effect last seen in ernest in 2013.
There comes an inversion with shorting where the demand to borrow shares simply becomes analogous to shopping on a credit card alongside the longs shopping with cash.
Julian,
Welcome back. A great write-up, but also a frightening scenario that could result in Tesla being too successful to be allowed to survive. Even if the SP doubles as a result of the M3 reveal, it would be nothing compared to the market caps of an Exxon Mobile, Saudi Aramco, Royal Dutch Shell, BP etc. What is there to stop the interested parties from just chipping an few $bn each and shredding Tesla?
Welcome back. A great write-up, but also a frightening scenario that could result in Tesla being too successful to be allowed to survive. Even if the SP doubles as a result of the M3 reveal, it would be nothing compared to the market caps of an Exxon Mobile, Saudi Aramco, Royal Dutch Shell, BP etc. What is there to stop the interested parties from just chipping an few $bn each and shredding Tesla?
dreamingof3
Member
If Fidelity and others wanted to play hardball and "create" a short squeeze they could call away their shares as we neared the high. there most certainly can be a short squeeze but certainly not at these levels. You are assuming Fidelity allows their shares to be borrowed. It does generate interest income however Fidelity cannot stand shorts. No employees of Fidelity are allowed to short sell stocks. Maybe retail longs should be hesitant to loan out shares.
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As for broad estimates for Model III reservations, I'm pretty confident we will get an idea of the scale and ramp from this site, similar to Models X & S reservations..not to the nickel, but close enough for approximations.
We won't have any way to get meaningful data, if Tesla doesn't give out sequence numbers and simply registers the reservation date, like they've recently done with the Model X.
The bear case is still intact, even after en explosion in Model 3 reservations.
Model 3 reservations would invalidate the shrinking/limited demand part of the bear case, but there is still the constant delays part, production scale part, non profit part, emerging competition part, GF stalled part, dilution part and "high valuation compared to the auto sector" part left to invalidate. The bears have been busy coming up with problems
. That is why I think we will see slower raise in the SP and it will happen once each of these points are shown to be false.Good write up Julian. One point that many get wrong is the fact that they think the larger company is at an advantage when a technology shift occurs because of resources and size, while in truth they are at a disadvantage because of old structures, both with respect to capital but also human and social. Managers that are expert on the old tech needs to be replaced and take new input, sometimes initiated by themselves, factories need to be shut down etc. Tesla has a massive advantage here as the whole organization is built for the new paradigm, and this advantage far outweighs the disadvantage with resources.
They can't. The main attraction of Musk maintaining over 25% of Tesla's stock is that he can veto a hostile takover. There are also I think many people like me that would vote alongside him at any price. On top of that, don't underestimate Musk, he basically owns US military access to space even if the Pentagon does not fully realize it yet and he's well on the way to owning the global internet and telecommunications too and with it wealth enough to buy a planet. Nobody has sheer power of that magnitude within their grasp, Musk does for real. This is not hubris. As Sam Altman pointed out recently via Twitter that it is a rare ability to be able to think clearly and in exponentials. That is all this is.
FredTMC
Model S VIN #4925
Assuming they are good (!) Tesla will likely make some sort of noise about it within a few days or a week.
If the teslamotors.com servers break, Tesla won't need to announce that... people will be discussing it already
I agree! Within a week, tesla will announce reservation totals. It will be a big moment for tesla (IMO)
dmckinstry
Model X 2019
I think all "TRUE" longs would vote with Musk against a hostile takeover. Of course, others may disagree with my definition of a true long.
dreamingof3
Member
Julian your thoughts on the chance of short interest being over 33 million shares when the new number comes out?
Do you think shorts were a driving factor behind the massive SP drop as quarterly data for the biggest holders shows an increase of position size?
Do you think shorts were a driving factor behind the massive SP drop as quarterly data for the biggest holders shows an increase of position size?
MartinAustin
Active Member
I would be surprised if Tesla were specific about the numbers. It would be more like superlatives... "unprecedented," "super huge" and so on. The ER would show the real numbers. They do want to maintain some advantage over competitors.
jesselivenomore
Member
Any talk of a short squeeze below 250, maybe even 280 is delusional. Try to think from others' point of view instead of just your own. Better yet, apply your own experiences onto the opposing point of view. When TSLA came off from all time highs and traded down to 250, were bulls shaking in their boots? Were they eager to sell? No. Most of them were still holding gains, just lesser, and waiting to see if we can bounce back. Plenty were even buying the dip thinking price is low. Buy low sell high right? Funny, because 230 was low coming from 290, and 200 a bargain! It wasn't until we broke below 200 when the bulls finally started feeling pain, and some began to capitulate, which is why you saw the acceleration to the downside.
The same mindset is with bears. Thinking they are itching to cover here is like thinking bulls were eager to dump their stock at 230-50. Most are still profitable, and waiting for it to head back down. Some are even thinking this is a nice pop to add on or reenter if you covered before earnings. Buy low sell high right? Well compared to 5 days ago we are high now, and definitely high if we can hit 180 resistance. Bears will not capitulate until they feel pain, just like the bulls. And that won't happen until we get back above 250 minimum.
That's how trading works. That's how psychology works.
One more thing:
This is what the bears are looking at. Try to think from their perspective. Why would they cover now when they are still profitable and more importantly their thesis is actually being confirmed? Earning accelerated to the downside as Q4 revenues hit an all time high. That is confirming the "the more you sell the more you lose" theory of the bears. Now as bulls, we see the details of why this is happening and why it should turn around in the future. But as bears, the present is confirming their views, and if they believed it will change in the future they wouldn't be bears in the first place. Which means until that graph starts turning around, until it actually happens, bears will be hunkered down. And there is nothing wrong with that.
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By the way, if someone believes 200 was a good buy, and 140 was just a better buy, then by that logic you will never be wrong. It is like a short saying 40 was a good short, but 100 was an even better short, and 290 was just the short of a lifetime. Not that he was wrong. Speaking of wrong:
What REALLY actually happened:
The same mindset is with bears. Thinking they are itching to cover here is like thinking bulls were eager to dump their stock at 230-50. Most are still profitable, and waiting for it to head back down. Some are even thinking this is a nice pop to add on or reenter if you covered before earnings. Buy low sell high right? Well compared to 5 days ago we are high now, and definitely high if we can hit 180 resistance. Bears will not capitulate until they feel pain, just like the bulls. And that won't happen until we get back above 250 minimum.
That's how trading works. That's how psychology works.
One more thing:
This is what the bears are looking at. Try to think from their perspective. Why would they cover now when they are still profitable and more importantly their thesis is actually being confirmed? Earning accelerated to the downside as Q4 revenues hit an all time high. That is confirming the "the more you sell the more you lose" theory of the bears. Now as bulls, we see the details of why this is happening and why it should turn around in the future. But as bears, the present is confirming their views, and if they believed it will change in the future they wouldn't be bears in the first place. Which means until that graph starts turning around, until it actually happens, bears will be hunkered down. And there is nothing wrong with that.
- - - Updated - - -
By the way, if someone believes 200 was a good buy, and 140 was just a better buy, then by that logic you will never be wrong. It is like a short saying 40 was a good short, but 100 was an even better short, and 290 was just the short of a lifetime. Not that he was wrong. Speaking of wrong:
What REALLY actually happened:
dreamingof3
Member
Looks like the tiff continues. The reminds me of a bull and a bear going at it and I know which is which.
Johan
Ex got M3 in the divorce, waiting for EU Model Y!
Thanks, great post and good perspective. One thing though is I believe there are many many more "buy and hold" investors on the long than on the short side, due to the cost over time in maintaining a short positions vs. a long position (where there's only opportunity cost). Sure there will be some die hard shorts thinking "I'll short this thing until TSLA goes bankrupt, it's bound to happen sooner or later" but this is not most shorts. Shorting a stock isn't the exact opposite of going long, in many ways it's similar but not the exact inverse. That said I agree with your logic regarding the psychology here. My hope of course is that short interest is higher now than before.
jesselivenomore
Member
In general this is absolutely true. Most stocks have less than 5% short interest and the vast majority are only for short term trades. However with TSLA it has had over 20 million shares short for upwards of 4 years now. Of course those shares have changed hands, but with consistent high short interest, there is definitely a contingent of bears with high conviction to their views. Much more so than regular shorts for regular stocks. It is a fundamental view against TSLA that will not change until Tesla proves them wrong fundamentally.
My impression is that the shorts are currently shorting more no matter what.
Stock goes up: "TSLA is even more overpriced, this is a great time to short more!"
Stock goes down: "TSLA is finally collapsing, time to short some more!"
Of course, some individial shorts will make money, but the above is how the shorts as a group are thinking. (IMHO) And the above is not a viable strategy for very long. Eventually they run out ammo, and the short-fest starts to dissolve - driving TSLA up.
Stock goes up: "TSLA is even more overpriced, this is a great time to short more!"
Stock goes down: "TSLA is finally collapsing, time to short some more!"
Of course, some individial shorts will make money, but the above is how the shorts as a group are thinking. (IMHO) And the above is not a viable strategy for very long. Eventually they run out ammo, and the short-fest starts to dissolve - driving TSLA up.
dreamingof3
Member
Tesla was heavily shorted in 2012 with corresponding share price of 30. WHOOPS! 40 million
Tesla is heavily shorted in 2016 with a "tsunami of hurt coming in 2016" WHOOPS Part deux
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