Short-Term TSLA Price Movements - 2016

[racer26]

Inventory cars that I looked at are all coming from the range produced inside of this Q, so I think you're optimistic with 26-28k.
I wish you were right and I was wrong, and there is chance this is the case. After so many disappointments, I'm keeping my expectations at bay...

Theres quite a few reports of stores selling off every car, including off the floor

 

[MitchJi]

Corner cases have nothing to do with Tesla's decision to emphasize radar over cameras. The problem with cameras is that they can't always "see". Through snow, or rain, at night or with glare (which is the problem they had in Texas).

I agree, glare is a big problem and reason for the radar. I consider that a corner case.

No, the reason for more extensive use of radar is to overcome the shortcomings with cameras and Lidar (seeing through snow, or rain, at night or with glare).
Tesla Autopilot 2.0: next gen Autopilot powered by more radar, new triple camera, some equipment already in production

Musk referenced radar’s capability to see through rain, snow, fog and dust, as reasons to favor the tech over lidar. Tesla’s CEO hopes to be able to achieve similar coarse point cloud maps, something easier to achieve with lidar, with radars through “temporal smoothing”.

Transcript: Elon Musk’s press conference about Tesla Autopilot under v8.0 update [Part 1]

I assume everyone received the blog piece that I wrote. I’ll just give it a basic overview. I think the real exciting thing is that we are making a much more effective use of radar. Where previously the use of the radar in the car was as a supplementary system to the vision system. Essentially because we weren’t confident that we could resolve false positives – like with radar we think that it should brake but it shouldn’t.

Transcript: Elon Musk’s press conference about Tesla Autopilot under v8.0 update [Part 4]

Alex Roy – The Drive
Hello everyone how are you? Would have the improvements in Autopilot 8 mitigated or saved Josh Brown’s life?

Elon Musk – Tesla CEO
We believe it would have.

If their update works with glare that means that they won't even need to address it as a corner case.

What is your source for Elon saying corner cases are a problem for Hotz's system?

Correction to article: "The First Person to Hack the iPhone Built a Self-Driving Car"

The article by Ashlee Vance did not correctly represent Tesla or MobilEye. We think it is extremely unlikely that a single person or even a small company that lacks extensive engineering validation capability will be able to produce an autonomous driving system that can be deployed to production vehicles. It may work as a limited demo on a known stretch of road -- Tesla had such a system two years ago -- but then requires enormous resources to debug over millions of miles of widely differing roads.

This is the true problem of autonomy: getting a machine learning system to be 99% correct is relatively easy, but getting it to be 99.9999% correct, which is where it ultimately needs to be, is vastly more difficult. One can see this with the annual machine vision competitions, where the computer will properly identify something as a dog more than 99% of the time, but might occasionally call it a potted plant. Making such mistakes at 70 mph would be highly problematic.

I remember an Elon quote, where he specifically said "corner cases are a problem for Hotz's system". If the example above, and common sense are not sufficient for you, (it's pretty obvious corner cases are a problem for self learning systems) try google. Someone mentioned seeding the data as a solution, but that would also involve seeding or at least checking how the car handled the seeded data. So Hotz's system still requires manually dealing with the corner cases .

I don't have a timeline. I have assumed the same thing as you... near the end of the year. But I will add this... If Tesla is planning to use NVidia instead of Mobile Eye... it's worth noting they have had a several new products come out and they have had supply issues. So that may be a factor.

Tesla responds to Mobileye’s comments on Autopilot, confirms new in-house ‘Tesla Vision’ product

But now Tesla is painting an entirely different picture of the reasons behind the end of the supply relationship. In doing so, Tesla confirmed its in-house ‘Tesla Vision’ product for computer vision

Tesla Autopilot 2.0: retrofit to next gen sensors likely to be available for some owners

Since publishing our piece on the Autopilot 2.0 last week, there has been a lot of discussion about the possible availability of a retrofit for the new suite of sensors on the current Model S and Model X. A retrofit is indeed likely at some level, but not for all Tesla owners.

As we reported in our last piece, the Autopilot 2.0 will feature a new triple front-facing camera setup as opposed to only a single front-facing camera on the current setup.

A retrofit for this new camera setup is likely to be made available to all Model X owners and possibly to Model S owners whose cars went into production starting last week.

Again, as we discussed in our last piece, some wiring harnesses and the housing for the triple camera system on the rearview mirror cutout are already in those vehicles, indicating that a retrofit for the new camera wouldn’t be a labor-intensive process, which is often the bottleneck for offering a retrofit.

 

[dennis]

^
Maybe a silly question, but once a lease is up and assuming the vehicle is returned to Tesla, if it is leased again or sold does this count as a delivery? (again? - if leases count as deliveries in the first place) !

Initial leases count as deliveries. How much revenue can be recognized immediately depends on whether it is a Tesla direct or 3rd party lease and GAAP or non-GAAP accounting.

Resale cars show up in Service and Other revenue while initial sales (build-to-order, inventory or demo cars) show up in Automotive Revenue.

 

[trentxintong]

You should wonder why Chanos is so sure that tesla will fail that he does so much PR on it. If they are going to fail he would keep quiet and not crowd the short trade with publicity. His endless interviews are designed to attempt to make it happen

His goal is to drive the stock down as much as possible so that he can make a profit. I do not think he believes TSLA will fail.

 

[dennis]

I forgot to add that resale cars do not count as deliveries.

 

[trentxintong]

Inventory cars that I looked at are all coming from the range produced inside of this Q, so I think you're optimistic with 26-28k.
I wish you were right and I was wrong, and there is chance this is the case. After so many disappointments, I'm keeping my expectations at bay...

I wonder what is still keeping you invested in this stock after "so many disappointments" ?

 

[Intl Professor]

A Field Guide to Tesla Short Sellers

A few days ago a member of this forum asked why a short would enter a new position when Tesla’s stock price is barely above 200. To anticipate the behavior of short sellers, one needs to understand the various flavors of Tesla shorts. Thus, this guide.
snip

When I was an undergraduate I overheard two professors marveling over Charles Stark "Doc" Draper's invention of inertial navigation so important later for the moon landing and, alas, ICBMs. "He even invented the terminology," they gasped.

Bravo sir, you've done the same for us this time and in so many other posts. Live long and prosper!, to coin a phrase.

 

[SPadival]

Has this been posted?

https://www.google.com.au/?gfe_rd=c...a’s+Short+Sellers+Are+Paying+Through+the+Nose

 

[MitchJi]

Thank you Vlad! Even though I disagree with some of your conclusions, your research and information has been extremely useful!

I'm of the opinion that the major institutions didn't bother recalling the majority of their shares because they are fairly certain of the outcome already.

I disagree. I believe that they intend to vote their shares. There were three things they could have done to obtain more shares, without issuing recalls, in order to vote:

1. They could have purchased additional shares, which they actually did.

WOW! (Take #2). Price T. Rowe upped their stake in TSLA by 42.6%, or 3,139,231 shares! So just five largest institutional shareowners collectively increased their TSLA position in Q2 by 9.5M shares!

2. They could stop loaning out more shares which they were also doing. They were buying shares, the short interest was declining and they had 0 shares available. Why else would that happen?

Fidelity:
Lend TSLA: 8.5%
Short TSLA: 16.5%, 0 shares available to short

Lend SCTY: 29.5%
Short SCTY: 52.0%, 0 shares available to short

3. They could also increase the interest rate to encourage "voluntary recalls", which has been happening recently (106%).

I believe that the major institutions have purchased shares in order to vote. The reason that could be important might depend on their plans for those shares, because as long as they hold those shares the number of shares available to purchase will be very low.

I believe that the institutions would be between daft and batshit crazy to sell any shares that were purchased, in order to vote before the Q3 Nov ER-CC (reasons below), unless there's an epic squeeze in the meantime. If they do sell those shares the process will probably be similar to the acquisition (done gradually, with mild weakening of the SP).

We are on the razor’s edge of achieving a good Q3, but it requires building and delivering every car we possibly can, while simultaneously trimming any cost that isn’t critical, at least for the next 4.5 weeks. Right now, we are tracking to be a few percentage points negative on cash flow and GAAP profitability, but this is a small number, so I’m confident that we can rally hard and push the results into positive territory. It would be awesome to throw a pie in the face of all the naysayers on Wall Street who keep insisting that Tesla will always be a money-loser!

Even more important, we will need to raise additional cash in Q4 to complete the Model 3 vehicle factory and the Gigafactory. The simple reality of it is that we will be in a far better position to convince potential investors to bet on us if the headline is not “Tesla Loses Money Again”, but rather “Tesla Defies All Expectations and Achieves Profitability”. That would be amazing!

Thanks for all your effort. Looking forward to celebrating with you,

Elon

It's clear to me that if they don't hit those goals that Elon will have pie in his face and that he would not have sent the email unless he was confident that they will hit those goals. I think if anything that email was meant to increase the positive numbers.

I used to believe that nothing else would cause a substantial increase in the SP, before Fremont production hits ~40k per month, but now I believe that achieving positive cash flow and GAAP profitability will do that (it's going to happen). Even if achieving positive cash flow and GAAP profitability doesn't move the SP ** executing on their production and delivery goals in the second half of the year **, to the extent necessary to do that, should do it.

My thoughts on the solar roof announcement:

1) The stock will not surge upwards after this announcement. It just won't. I dread the 500 posts that will speculate on that front. These product announcements simply never move the stock.

This is potentially much more than a normal product announcement! Didn't you notice that Elon's tweet moved the SP? Two reasons IMO. Deflating the SCTY FUD, and showing that TE is real. Those two things are connected and either of those things by themselves should have an impact, but the combination could be big.
1. Compelling solar roof.
2. TE V2, with about 25% increased capacity, with some combination of reduced prices or increased margins.
3. Cheaper and better inverter.
4. ** GF cell production starting, probably at about 15 GWh per year. **

The items in bold with the "**" above strengthen the case for M3 production being on schedule.

Elon said that he expects TE to ramp in Nov-Dec. Even if that slips by a full Quarter (which I think is highly unlikely now) we should see a financial boost, at the latest by the Q1 May ER.

In other words between now and the Q3 ER-CC I am extremely bullish. Not sure yet about the Q4 ER-CC.

 

[GoTslaGo]

A Field Guide to Tesla Short Sellers

A few days ago a member of this forum asked why a short would enter a new position when Tesla’s stock price is barely above 200. To anticipate the behavior of short sellers, one needs to understand the various flavors of Tesla shorts. Thus, this guide.

Successful Shorts
Longs need to keep in mind that skillful shorting can lead to profits and that some shorts have made money from Tesla multiple times. The key to making money is the same as with longs, which is to buy low and sell high, but with shorts the order of buying and selling is reversed. For the past two years, Tesla has been rather range-bound. Longs who have bought below $200 have not had long to wait before they’re in the money and shorts who sold-into new positions above $250 have enjoyed similar success. One big difference between longs and shorts, however, is that shorts pay interest to maintain their position, and thus the success of a short depends not only upon the entry price and the trajectory of the stock price, but also upon the interest rate paid. Both longs and shorts need to be aware that Tesla will inevitably depart its range-bound ways in time: either through a severe drop or a breathtaking rise.

The Two-headed Short
This anatomical oddity is actual found quite often in the wild. A two-headed short is one who holds short positions in both Tesla and SolarCity. The reasons for holding short positions in both companies are similar to the reasons why many longs hold positions in both: these stocks are volatile growth stocks with lots of profit potential and both are ultimately controlled by Elon Musk. Whereas longs see Musk as a visionary, two-headed shorts see him as P.T. Barnum reincarnated. Some longs wonder why shorts would criticize Tesla’s proposed merger with SolarCity. Wouldn’t it make more sense for shorts to encourage the union if they believe SolarCity will drag Tesla down? The answer is that the critics of the merger are typically two-headed shorts who do not want the merger to take place. They perceive a high chance of immense profits if SolarCity is left to stand (or fail) on its own. Criticising the merger not only supports the goal of a stand-along SCTY, it also provides fear about both companies and can result in lower short-term stock prices for both.

Shorts with Malice
These shorts have an axe to grind. Rather than purely speculating on the price of Tesla stock, they wish to actually influence the stock price. Since stock price affects the ability to acquire capital for Tesla, shorts with malice hope to speed up the demise of Tesla or at least slow its success. Tools include FUD in the media, general short-selling (which artificially depresses the stock price) and strategic short selling (big sales when a TSLA climb shows a moment of indecision, big sales to induce a drop, sales during low-volume trading hours to maximize price drop, and sales that cause TSLA SP to close either a fraction of a point below the green or below an important milestone such as 50 DMA, 200DMA, etc.). Mark Twain once remarked, “Everyone’s always talking about the weather, but nobody ever actually does something about it.” Shorts with Malice, don’t just short TSLA, they do something about it.

Two-headed Shorts with Malice
This short is of course a hybrid of the previous two types. What really stirs up the malice in these shorts is the feeling that Elon Musk personally picked their pockets when he disrupted their successful short at SolarCity and proposed the merger with Tesla. Boom, just like that, they were poorer. One example of a two-headed short with malice is Jim Chanos, whose well-publicized rants on Tesla and SolarCity most definitely affect the price of TSLA.

The “Til Bankruptcy Do We Part” Shorts
These shorts are convinced that Tesla is going to the corporate boneyard, it’s just a matter of time. After all, haven’t all U.S. car companies except for Ford and Tesla gone bankrupt in the past and isn’t it true that every other auto company founded within the past hundred years has gone out of business? The acquisition of SolarCity makes these shorts positively giddy when they contemplate the possibilities. Why consider normal trading ranges for TSLA when they’re convinced it’s goint to zero? What the “Til Bankruptcy Do We Part” shorts have correct is that the game ends with one party going bankrupt, but that someone (unbeknowst to them) may not be Tesla.

The Two-headed “‘Til Bankruptcy Do We Part” Short with Malice
No need to explain, you have the idea. What’s interesting is that traders such as Chanos are not in this group. Once the Chanos type of trader has established a short position, they will let other potential shorts know of their position so that they short the stock too and drive its price further down. Chanos will be smart enough to get out of Tesla when it’s upward trajectory become all too clear and he doesn’t want his losses to go any higher, but he won’t let other shorts know of his plans until he is already out. The purpose of the small-time shorts is to support an established short position by the smarter short and to be left holding the bag while the smart shorts exit their positions.

Thanks for helping us all to try to understand shorts. I have a question about how much they have to pay.

All shorts have to pay interest to maintain their position. Do the interest rates change once they establish a position or is it fixed for as long as they maintain it? If it changes, is it quarterly, yearly, etc...?

Let's say Chanos established a substantial short position in 2014. Is he still paying the same interest rate from 2014, or does it change? Do the new interest rates that we see on the "tracking short interest" thread only apply to new shorts or do long term short positions have to change their rates too?

Is there a limit on how long you can hold a short position?

Thanks! Trying to learn...

 

[Zhelko Dimic]

I wonder what is still keeping you invested in this stock after "so many disappointments" ?

What keeps me in TSLA stock is belief it's the best long term investment I've seen. I am all in Tesla. I'm actually more than 100% all in. Trying to get to only 100% in.

I believe Tesla is the only currently existing company that has _some_ chance of hitting 10T capitalization during my lifetime, say 20-30 years.

What keeps me mostly out of this forum are longs that have lost capability for critical thinking, and are making it uncomfortable for other participants to offer any critique of Tesla.

 

[esk8mw]

Well. 4638 in Q2, 2659 in Q1 and 507 in Q4. That's 7,804 MX we can say were delivered before the start of Q3. Lets call it 8,000 to err on the side of caution for a Q3 number.

If we trust the poster that said that 219XX went into production yesterday, thats nearly 22k. Lets say -2k for ones that will not make it to the customer by Sep30. (I don't think you can realistically deliver a car produced in the final two weeks of a quarter within that quarter)

20k-8k = 12k MX. Perhaps theres 1-2k VINs skipped or otherwise not delivered in there. 10k. I expect over 10k MX deliveries in 3Q16.

Tracking highest VINs | Page 50 | Tesla Motors

That thread suggests that MS VINs were being issued at around 150k at the end of Q2, and that 147k was delivered right in the tail end of Q2.

Model S Order & Delivery 2016

There have been at least a few delivered from the 161k set. 161 - 147 = 14k.

More evidence that we'll see at least 24k. I still think my expectation is 26-28k - since this doesn't account for the firesale on inventory cars produced before Q3.

Something everyone in the VIN counting world always seems to forget - the 22k VINs are production VINs only. The 7804 previously delivered X also includes all sigs (about 2300) and founders (200ish). So, you actually need to add about 2500 to your delivered X estimate. Don't sleep on the sigs!

 

[geneclean55]

Something everyone in the VIN counting world always seems to forget - the 22k VINs are production VINs only. The 7804 previously delivered X also includes all sigs (about 2300) and founders (200ish). So, you actually need to add about 2500 to your delivered X estimate. Don't sleep on the sigs!

I once tried looking back through some of the earliest MX delivery threads to get to the bottom of this. Its not clear to me if the earliest production VINS come from a separate pool or are numerically intermingled with the signature and founder VIN numbers. For example, I couldn't find a production VIN number below 200, and I couldn't find a signature VIN and a production VIN with the same number. Admittedly, I was relying upon a fairly small number of posts for information.

 

[esk8mw]

I once tried looking back through some of the earliest MX delivery threads to get to the bottom of this. Its not clear to me if the earliest production VINS come from a separate pool or are numerically intermingled with the signature and founder VIN numbers. For example, I couldn't find a production VIN number below 200, and I couldn't find a signature VIN and a production VIN with the same number. Admittedly, I was relying upon a fairly small number of posts for information.

I can't be 100 percent sure, but I'm almost positive they are separately enumerated. A quick look yielded this thread, which has three mentions of sub 200 production vins. <a href="https://teslamotorsclub.com/tmc/posts/1290639/">RN number just turned into VIN # - any clue on timing to delivery?</a>

Considering basically all us sigs (like 1200 I think) were built and delivered before the production models and there are tons of reports of three digit production vins, I find it hard to believe that any three digit production vins would have been available if the numbers do not repeat. Happy to be proven wrong (or right) by any early adopter X owners if they happen to know!

 

[geneclean55]

I can't be 100 percent sure, but I'm almost positive they are separately enumerated. A quick look yielded this thread, which has three mentions of sub 200 production vins. <a href="https://teslamotorsclub.com/tmc/posts/1290639/">RN number just turned into VIN # - any clue on timing to delivery?</a>

Considering basically all us sigs (like 1200 I think) were built and delivered before the production models and there are tons of reports of three digit production vins, I find it hard to believe that any three digit production vins would have been available if the numbers do not repeat. Happy to be proven wrong (or right) by any early adopter X owners if they happen to know!

I agree that this would make the most sense. One quirk though is MX deliveries to the rest of the world. I distinctly remember a European Signature MX whose VIN number was way higher than you might expect considering it was a Sig car. But by that time, many production MX cars for the US had already been built.

 

[tlo]

I believe Tesla is the only currently existing company that has _some_ chance of hitting 10T capitalization during my lifetime, say 20-30 years.

This is the first time I've heard anyone talking about a 10T cap for any company. Care to share how you envision that being possible?

 

[drinkerofkoolaid]

Might be meeting Robby Krieger tomorrow. If possible, I'll ask him to spread the word.

 

[Zhelko Dimic]

This is the first time I've heard anyone talking about a 10T cap for any company. Care to share how you envision that being possible?

Firstly, this is not an investment theses, nor is it my goal. It's just a lazy thought, one possible future of them all. Some of the reasoning Tesla could hit 10T in 20-30 years:

- What we know of Tesla today may be tiny subset of what Tesla is in 15-20 years. Tesla's vision and goalposts are pushed forward constantly, and Tesla the company has proven adept at keeping at existing opportunities, while pivoting and developing skills towards new ones (eg. becoming leader in autonomous driving). This is driven by Musk's ambition, and also by his capability to rally company and great talent behind himself. Honestly, this aspect of the company is worrying me to some extent, as I feel Elon is constantly on the edge of burning out workforce, one slip away from minor or perhaps major disaster. Yet, this is also a reason that Tesla's limits are undiscovered, and more importantly they're undiscoverable from this vantage point. Here is one example: we knew about Master Plan. But Master Plan didn't say anything about eliminating dealer from equation, developing autopilot, incoming autonomy and possible shared mobility. These are all opportunities that opened up along the way, as original goals of Master plan were being pursued.

- Tesla started as a car manufacturer, and it now affects many industries with massive revenues/capitalization: car manufacturing, dealerships including service centers(I believe 600B market cap industry in NA alone!), parts supplies, vehicle supply chain (increased vertical integration and bringing higher value work back home), it owns internal software for supply chain mgmt, there is autonomy (drivers are 7% of workforce in NA!!!) and potential shared mobility, gas stations, gas drilling/exploration, electrical energy supply, peaker plants replacement, grid balancing, bringing electricity to countries without grid, electricity storage for all sorts of purposes we haven't though about yet, cargo transportation (semis)... I don't know where Tesla will end up, and they can't pursue _everything_, but opportunities in front of them are MASSIVE. There is no other company that has natural entry into so many different industries. And for every $ disrupted industry loses, disruptor is likely to pocket at least some dimes.

- And final two elements to big numbers, natural inflation and "winner takes all" evolution of the markets. What do I think with later? It's my sense market capitalization have been growing faster than rate of inflation, perhaps much, much faster). It used to be oil companies at the top, and they have natural limits to growth. Today's kings are tech companies, you know, software that eats world, yadda, yadda. In any case, this is unprecedented period of time, where small number of individuals can create something through software, and Tesla is doing that, with extension into the real physical world of production. But I do see them as kings of tech first, and everything else secondary. So I believe that companies that do well will get bigger not only absolutely, but also relative to the median participant in S&P500, with this effect stronger the further we look in the future. And serendipitously, Elon's ambition and Tesla's open opportunities could make Tesla absolutely the largest of these new giants.
Or maybe not, as I'm not sure if future as I describe it will be interesting to Elon... First part for sure will be interesting, but money is in the later part (transition from 1T -> 10T), and that could be just a "boring execution" for Elon, so he may not care about it. and succession is always tricky...

It's late and these are poorly organized thoughts - perhaps I'll come back to clarify and rewrite. Hopefully it makes some sense in this form.

Again, I see this as a potential future, far from even remotely probable, and yet, if you look where Tesla was in 2010, I think most people would be blown away with where it is now.

So yes, I see Tesla under-performing short term, and OVER-performing long term. And that comes to expectations management (I am so tempted to say Elon sucks at it, but I don't want to ruin preceding feel good content

 

[Drivin]

This is really fantastic:

MKBHD is a majorly influential YouTuber (3.7 million subscribers) and just picked up his P100D today! This video will get millions of views. Name one other automaker whose customers will provide this level of free advertising!

Mercedes - drake raps and tweets about it 34m followers.
Bentley - kardashian tweets about it to her 48m followers.

Sorry, you only asked for 1.

 

[anon]

Confirmation that production will be shut down for the first week of October: https://teslamotorsclub.com/tmc/posts/1748458/