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Short-Term TSLA Price Movements - 2016

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#6,362
Zhelko Dimic said:
Events that didn't come to pass yet have uncertainty related to them, uncertainty that shaves chunk of potential price.
Company trying to do big and hairy stuff gets to recoup larger stock prices increases when it succeeds (removes uncertainty), than most companies with more modest goals.

Ideological bulls trust goals will be achieved with such certainty, that they under-price risk compare to average/efficient investor, and hence see stock as underpriced.
For example, I'm convinced TSLA will be $500-$5000 in 10 years. Maybe a touch more...
Click to expand...

Yeah, if your estimates are far from the current market value, then you should be skeptical and do more research. But sometimes - or quite often - the research just validates your assumption. For Tesla this is the case. There is actually a verifiable research gap between the bear and the bull thesis with this stock. Bears use analogies while bulls are much more company specific.

I also think this is the case with the sophisticated shorts that no doubt exists. They are more financial market, income and balance sheet driven in their analysis and do not focus as much on engineering, tech and the management of the company. I have yet to see a good bear case that does focus on those things and recognize the value in Tesla properly.
 
#6,363
Shorts are people too

From stocktwits. Reason to post: Understanding psychology of short
Mods: please delete if inappropriate. I'm having second thoughts this should be here.

Protagonists
nnaa: distressed short
konnery: seems to be experienced trader, in there to scalp




 
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#6,365
Zhelko Dimic said:
Trying again: anyone understands this about 2M shares?

http://stocknewsflow.com/1318605_000156459016013217_0001564590-16-013217
Click to expand...

I draft these things too. They are just reserving shares for issuance under the incentive plan (stock and option grants to employees and directors) and their employee stock purchase plan (plan where employees can defer base salary to buy company stock, usually at a discount). Any shares issued under these types of plans have to be registered with the SEC. The grants are dilutive when issued, not when registered under the Form S-8.
 
#6,366
esk8mw said:
I draft these things too. They are just reserving shares for issuance under the incentive plan (stock and option grants to employees and directors) and their employee stock purchase plan (plan where employees can defer base salary to buy company stock, usually at a discount). Any shares issued under these types of plans have to be registered with the SEC. The grants are dilutive when issued, not when registered under the Form S-8.
Click to expand...


Ok, thanks.
Company I work for is using the same pool of registered shares for years, no new shares registered, so I thought that was a bigger deal...

- - - Updated - - -

SBenson said:
Care to share some?
Click to expand...

14K cars produced in Q4 - that was the only interesting bit to me.
 
#6,367
If the model 3 alpha and beta prototype milestones are going to be met soon, they need to reserve about millions of worth of shares for Elon alone. The engineering team probably will get shares as a similar performance reward too.

Zhelko Dimic said:
Ok, thanks.
Company I work for is using the same pool of registered shares for years, no new shares registered, so I thought that was a bigger deal...

- - - Updated - - -



14K cars produced in Q4 - that was the only interesting bit to me.
Click to expand...
 
#6,368
The net present value of TSLA is based on the risk based discount of future earning, or so I seem to recall. The risk based discount is built on each stakeholders model. My model sees Tesla growing over 70% this year, and probably about 40-50% next year as it catches it's breath, building up for the Model 3. Going into 2018 I see growth returning to 50-70% in 2019 and 2020. My model assumes Model S & X reach about 120,000 cars annually and maybe a bit higher and it see's Model 3 maxing out around 250,000 out of Freemont. They'll need to increase the amount of assembly in Tilburg to hit 500,000 by 2020, which I think they also will do. Shipping batteries straight to Tilburg and doing more body assembly in Europe will ease currency risk and allow Tesla to slowly build their presence in Europe without needing to go to market for more money. My model also sees Tesla Energy doubling every year through 2020 until GF1 is complete and GF2 & GF3 are both started in the same modular growth pattern in Europe and Asia.
The typical bear model thinks Tesla can't maintain adequate cash flow to invest in the GF and get the Model 3 running. They either think that Tesla won't do the dirty work and implement well and on time, or they think the legacy competitors will throw money at the EV problem and bully them with a big stack of cash. I can understand the bear thesis. I know a lot of guys who want bad-ass pickup trucks with limo seating in back, or like the proven quality and prestige of Audi A6,7 or 8.
Everyone's model is wrong. It's just a model, it is not reality. We'll see who gets it closer to right. The best numeric guess may well be wrong on why and the best understanding of market drivers may be wrong on end results for Tesla. I hope my model is right. My bear model sees Tesla with about 20-25 billion in sales in 2020, but I expect it to be closer to 40 billion. If it retained its 2.5 times earning (doubtful), the stock would be worth 60-100 billion. With dilution, perhaps 500-700 a share. Could a black swan mess this story up, or an orange swan with funny blondish hairlike stuff floating on top his head? All sorts of things beyond our imagination can change the path. Assuming Washington gridlock and no major recessions and I think my model is pretty solid, but it's just a model.

Sorry for the long post. I intended a snarky NPV comment and got carried away.

lango said:
Yeah, if your estimates are far from the current market value, then you should be skeptical and do more research. But sometimes - or quite often - the research just validates your assumption. For Tesla this is the case. There is actually a verifiable research gap between the bear and the bull thesis with this stock. Bears use analogies while bulls are much more company specific.

I also think this is the case with the sophisticated shorts that no doubt exists. They are more financial market, income and balance sheet driven in their analysis and do not focus as much on engineering, tech and the management of the company. I have yet to see a good bear case that does focus on those things and recognize the value in Tesla properly.
Click to expand...
 
#6,369
Mod note:
I'm going to let Zhelko's post #6362 stand for the nonce but it's never a good idea to lift items -and most definitely not a series of others' entire posts - from a different platform. If the post does remain, please do not take it as carte blanche to continue such practice.
 
#6,371
Don't have much time and I am on my iPad, but the interesting nuggets to me are the warranty provisions and expense which seems flattish on a per car in the fleet basis, the $317 or so million spent so far on the pilot phase of the Gigafactory (I estimate only about $75-150 million more for that phase), the description of parts of the factory expansion thus far and for Model 3, and so forth. The only true measure of demand we have is the customer deposits and it is up YoY to $283 million, even after a blockbuster delivery quarter. Asset based credit line details are interesting too. I have to go back and check on the finished good inventory comparison QoQ, try again to make sense of the deferred revenue, and a few other details.
 
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#6,372
lango said:
But the market is pricing risk and probabilities as you say. And the question is how effective it is doing that and if it gets it right almost like clockwork or if it can be wrong with respect to the pricing of risk and probabilities. So with right or wrong I mean if the probabilities are priced and evaluated correctly, not that the outcome of the dice roll is 0 and 1.

The market is pricing in a not insignificant risk of bankruptcy for Tesla. The whole endeavor and mission for Tesla is to become much bigger and if they fail with that they are not going to survive.

Likewise, I think the market is pricing the risk of bankruptcy for GM and Ford to be lower than Tesla, and that is not the case if I go by my probabilities. So am I right and the market wrong? I don't see why that could not be the case, even if it might sound arrogant.

Also arbitrage is risk free profit right? What I am talking about is not that, but that the reward vs risk curve is much better in this case than the market price indicates.

I don't think we should have a discussion about market efficiency, really. But the notion that Tesla is a very risky investment because the market says so I think is flawed and is only true unless you dig deeper. Basically, the less research one has been doing the more risky and overvalued Tesla appears to be and vice versa. I have never seen a plausible bear case that has been done on a company and management level, all of them has been made by analogies or by (shallow) financial metrics.
Click to expand...

+1 and very well said. I think the bear case is the past and the bulls see the possibilities in the future.
 
#6,375
Zhelko Dimic said:
From stocktwits. Reason to post: Understanding psychology of short
Mods: please delete if inappropriate. I'm having second thoughts this should be here.

Protagonists
nnaa: distressed short
konnery: seems to be experienced trader, in there to scalp




Click to expand...

This is classic. Thanks for posting

as an individual investor, I can't imagine why you'd ever want to short against Musk and what he's accomplishing.

If anyone digs a little they realize this dude put his entire net worth on the line for the end oil and survival of Human race.
 
#6,379
TSLA

Rarity said:
TSLA is the exception probably because Musk used the squeeze to reduce risk on the long-term plan. He [will] do so again.
Click to expand...


Indeed. [in square-brackets above, my interpretation].

So we have heard a few textbook truisms conflated with TSLA. Allow me to present some observations that actually apply to TSLA.

It is all very well to say short interest and motives do not matter and all will even out in the long run to a stock price comprised of a profit and a profit multiple (or words to that effect) however that would be a very long term view and it still does not shed any light on anything but a textbook theory of stocks in general.

To get more specific about TSLA, one of the simplest long term concepts would be trend investing in the price and capabilities of batteries verses the benchmark of fossil fuel transportation and fossil fuel energy extraction storage and production prices. Noting that Tesla is well positioned to take advantage of advances in batteries because it has developed the balance of system, brand and infrastructure to do so.

An extremely simple way to trade TSLA for the long haul is to just buy alongside its CEO. Musk has perfect insider information and he has a stronger track record of rapidly accumulating net worth than any other example I can bring to mind. A bit of that action would seem reasonably likely outperform the markets over the long haul.

Considering that this is the Short Term Thread and Long Term Sentiment is only tangentially relevant, how about some shorter term thinking.

Volatility. In my opinion TSLA volatility is extreme not just because it is purely suspended by arbitrage of investors jockeying for a slice of a far future pie but because what I term 'the effective free float' is an extremely small percentage of the total float. About 4-6%. The remainder is held primarily by strong hands. About 67% by institutions and by insiders that include hand that has committed to the markets not to sell at all except upon selling the entire company. 27% is held by Musk himself. The balance of 0-2% on the assumption of additional strong insiders or philosophical buy and forget retail holders of which TSLA anecdotally contains an unusual percentage for a publicly traded stock.

The way that 4-6% trades by the Longs (actual investors) does not seem to be textbook fashion. It both appears to be the case, logically it is the case that it is utterly dominated by the volatile sentiment and behavior of the Shorts, the narrative as it appears to the Shorts, and NOT to any meaningful degree the sentiment and behavior of the Longs because Short Interest does not represent 4-6% of the float. It represents 32.5% of the float.

My observation of this stock is that it is practically all about anticipating the behavior of the Shorts.

Observations and Implications for the Short-Medium Term Long:

1. This stock does not reward traders for anticipating that some Long Thesis is correct. It rewards traders that anticipates shorts scrambling for cover due to the collapse of a significant short thesis. This is subtly but materially different, in terms of timing and the nature of events that directly and convincingly disprove a short thesis. For example, just a trivial one, earlier today we learned that Tesla has addressed a matter of importance to the sentiment of a great many Model S customers, one that was spilling over into some vocal customer resentment. The ability to have a car towed for warranty work at a range of 500 miles from a service center rather than suffering the indignity of being charged up to $1500 for a third party flat-bed to address what should be a free warranty service or a low-cost "Ranger" service. Customer and presumptive retail shareholder faith restored! That ought to be great for TSLA right? Wrong. It's only mildly sickening to the Shorts because it does not unravel any significant Short thesis about the customer sentiment towards flat beds. If and when Consumer Reports reverse their reliability stance towards the Model S, that would be worth a 5-10% SP hike, but only to the extent that the bear narrative is resting on reliability FUD with Consumer Reports as an underpinning and has not moved on to some other FUD entirely. The launch of the "D" and something else (Autopilot) was a fascinating example of Long vindication that is non-trivial. This was a stunning milestone achievement for Tesla and the stock actually sagged. Again, it unraveled nothing for the Shorts.

2. Never underestimate the power of denial, confirmation bias and projection most especially in a tech disruption (or misunderstanding of what a tech disruption actually is). The Short game with Tesla is a masterpiece of all of the above and Musk behaves like he knows exactly how to use it to Tesla's advantage. Musk does not drop hints in public to convince gullible longs to bid up TSLA as the Shorts Project upon him. Direct TSLA stock promotion goes in a prospectus directed to the institutions that oversubscribe funding rounds usually within 24 hours of publicly announcing their existence - I have had Goldman send me these things and they generally arrive a week after the round has closed. No. In public he's in it to lead the shorts up the garden path by playing skepticism against itself like a Boss.

If words and pictures and conclusively logical statements were enough to persuade people to act in unison on a good idea and for skeptics and vested oponents to throw in the towel and get out of the way there be no need to create Tesla.

Here try this: Renewable electricity mileage is already inherently a heck of a lot cleaner and cheaper than pumping oil and burning gasoline, thereby addressing the world's largest market rivaling or exceeding the value of the market for food. Why not then innovate the costs out of mass producing networked electric cars that can take advantage of this fact in the certain knowledge that the cost trends in battery storage to make the cars inexpensive to build are on trend to undercut the internal combustion engine and keep on going down from there in a way that guarantees the total inability of traditional polluting vehicles to compete in the luxury high performance arena followed rapidly by the mid market after a cost tipping point that back in 2003 was obviously coming into view. Why not just write this and presume the world would just accept the truth of it and get on with it accordingly.

Apparently on this kind of subject people need to be shown step by step with actual product hardware and economics that work. It also seems to be necessary to defeat skepticism, obstruction an entrenched bloody-minded stupidity at each and every step of the journey as a kind of quality control measure. The beauty of this is many fold. Firstly. What could be more of a gift to company setting out to change up a major chunk of the world economy than large competitors in complete denial of a most obvious existential competitive threat such that they fail to react competitively for well over a decade. Or how about Projection from an industry that has degenerated from the fiercely innovation-led businesses envisaged by their founders into focus-groups, lobbying for government favors and advertising stunts and operated by hired managers that are prone to imagine that all Tesla has discovered is a clever new twist on a PR trick to fool shareholders, customers and governments just like they do for a living. As for confirmation bias, it is reasonably safe to say that I can say what I like here without giving the game away to the Shorts. While some Longs may be interested in what I have to say, the Shorts will just take me for a fanboy or one of Musk's brainwash victims and disregard the whole lot of it (despite the fact that I not only knew this stuff but built a global business to go after the first pieces of this puzzle before Tesla Motors Inc existed). It is equally true that the Shorts that are playing the game of Shorting and then flinging FUD at the (4-6% of) actively trading Longs to see if anything sticks are only actually convincing each-other into a state of group think.

This I think is what makes TSLA Short Interest so special and the multi $billion silo of market capital that it is. It is absolutely possible to figure out what Tesla will do. The FUD that props up the Shorts is public information contributed volubly by the shorts and their spokesmen like a poker hand in plain view and the disconnect with reality is obvious at all times (it does correlate perfectly to the prevailing short memes provided by Seeking Alpha - for real and back tested) and every now and again it is possible to identify a serious short thesis that is seriously vulnerable to collapse, precipitating the dumping the short interest directly onto the TSLA market cap.

The last major one of these was the collapse of the "guaranteed 2015 delivery miss" FUD that went on for nearly half a year before it dawned on the Shorts that Tesla would just make up the missing Model X numbers on Model S.

The next one that is currently in the process of going down in flames is the "looming competition that will crush Tesla" FUD.

The one after that involves the collapse of the "Tesla does not make any money" FUD

The one after that is "holy hannah were toast" reality check on Model 3 reservations presenting a real and present danger to large competitors.

That's this year in review previewed folks.
 
#6,380
Julian Cox said:
..

The last major one of these was the collapse of the "guaranteed 2015 delivery miss" FUD that went on for nearly half a year before it dawned on the Shorts that Tesla would just make up the missing Model X numbers on Model S.

The next one that is currently in the process of going down in flames is the "looming competition that will crush Tesla" FUD.

The one after that involves the collapse of the "Tesla does not make any money" FUD

The one after that is "holy hannah were toast" reality check on Model 3 reservations presenting a real and present danger to large competitors.

That's this year in review previewed folks.
Click to expand...

+1 to the whole post. Interesting reading. :)

I am not sure I agree/understand how the "looming competition that will crush Tesla" FUD will disappear in 2016? As long as all "real" competition is planned for 2018-> ?
I guess Bolt is the one which will be forgotten this year? I can agree on this one, but this is a minor one..

Most shorts talk about what the other ICE producers hypothetically "will/can/could" produce, still vaporware IMO, but not for Anthon and the gang?
I think this is something that wont go away for a long time yet? I would think they will hang on to this idea until 2020-2025..?
 
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