Social Chat - Short Term TSLA Movements

[sundaymorning]

I think there's a good chance (ie., 30-40%) that they actually miss Q3 guidance on # cars produced by 200-400 cars (guidance was 9000 cars produced). But I think they'll meet guidance on deliveries (7800 cars) because they have a lot of options (ie., selling cars in pipeline or inventory cars). So I think Tesla missing guidance on cars delivered is relatively low (maybe 10-15%).

In terms of profitability, Elon already mentioned with the power train warranty announcement that Q3 could negatively affected. I think Estimize and such places aren't factoring in real-time estimates from the analysts that matter. Also, whether Tesla is $0.05 eps non-GAAP or -$0.05 eps non-GAAP... I don't think it has a big impact. Actually, let me rephrase that. If there is vague or weak forward guidance then having a slightly lower eps (even negative) than expected is going to negatively affect Tesla's stock price. However, if the following quarter's guidance (and following year) is very strong then I think a slight miss on earnings eps won't have much impact. The more important issue is Tesla's trajectory and whether they're on track to meeting Q4 guidance or not.

Also, Q3 earnings will happen in early November so Tesla will have good visibility into Q4 and I think if they re-affirm 35k deliveries for 2014 and 13k+ deliveries for Q4 then investors will believe them since it would be almost halfway into Q4 when they share that info.

I remember during Tesla's 4th or 1st quarter announcement of 2013, I was virtually 100% carefree. I was neutral in terms of my feelings on a beat or a loss. If they beat, then my account would grow, but if they didn't beat then I would be able to buy a lot more shares on the dip. I was actually a bit excited about being able to buy more shares knowing that the rest of the year will be pretty darn good. Right now, I have that same neutral feeling. If tesla beats then great! But if share prices dip for some reason, then it'll be another buying opportunity of a lifetime as outlook for the rest of 2014 and 2015 looks fantastic. Especially when x is available. For those trying to time this stock, I have to warn you, it's impossible. You may never see prices this low again if tesla beats, meets 4th q guidance and announces x to be on time.

 

[Tasmanian Devil]

@chickensevil: Thanks for elaborating. I understand Your concerns better now and You have a point there. I also agree that FUD writers will write FUD. They will surely exploit even the little dent in production because of the retooling. But what keeps me optimistic (short term, too) is that the Tesla-Story has grown a much broader base of people / investors who are aware that Tesla is not Vaporware. Even before the three cars...You know...lighting up, the stock was steadily gaining, probably because of a growing base. Now a year later this base is standing on much more solid feet. That also leads me to believe that the market price is not overvalued. TLSA has gained a lot of credibility/credit/trust since then. The Model X will put that trust on even stronger feet. So when was the last time a FUD writer had really success in pushing the stock down significantly ? They despereatly write till their fingers bleed atm, but they don´t find anything. But You are right, the points You made could change that. I have been successfully avoiding giving them clicks for a few months now (yay !). Every setback since the incidents was just a healthy correction for the stock price which is in my opinion absolutely anchored in reality atm.

 

[Chickenlittle]

Here is a link to the tweets of someone who appears totally consumed with being anti-TSLA, and repeatedly accuses Elon of pumping the stock. If the tweeter truly believes he is right, then he must think Elon is mighty good at pumping. Therefore one might assume the tweeter would want to become a shareholder: Mark B. Spiegel (markbspiegel) | Twitter

@chickensevil: Thanks for elaborating. I understand Your concerns better now and You have a point there. I also agree that FUD writers will write FUD. They will surely exploit even the little dent in production because of the retooling. But what keeps me optimistic (short term, too) is that the Tesla-Story has grown a much broader base of people / investors who are aware that Tesla is not Vaporware. Even before the three cars...You know...lighting up, the stock was steadily gaining, probably because of a growing base. Now a year later this base is standing on much more solid feet. That also leads me to believe that the market price is not overvalued. TLSA has gained a lot of credibility/credit/trust since then. The Model X will put that trust on even stronger feet. So when was the last time a FUD writer had really success in pushing the stock down significantly ? They despereatly write till their fingers bleed atm, but they don´t find anything. But You are right, the points You made could change that. I have been successfully avoiding giving them clicks for a few months now (yay !). Every setback since the incidents was just a healthy correction for the stock price which is in my opinion absolutely anchored in reality atm.

Yes always new FUD but it's getting more benign. Nobody predicting BK or cars exploding anymore. No one saying can't build it. Last FUD I read was that tesla will not make its qtr because wait is longer and that somehow gm issue with corvette shows it can happen

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Q3 2013 was a disappointment (at least I was very disappointed and shared so immediately after the call and in the days that followed) since they didn't give any guidance for 2014, while the stock was a crossroads and needed that guidance. And then the fires hit. IMO the stock should have never dropped all the way to $116.10 if Tesla would have issued 2014 guidance of 35k cars. I think the fires would have taken TSLA to $133 (where there was strong support) and 2014 guidance would have kept it above that. But without any 2014 guidance, the stock was free to fall further than $133.

I remember 2013 1 st qtr was disappointment with poor margins. EM wanted to "punch himself in the eye". Parts suppliers would ship parts claiming they would only build 2000 cars a year and tires flown in from Europe.

 

[MartinAustin]

...battery pack assembly did not have to stop for upgrade of the production line so plant may not have been totally idle for those two weeks.

We should attention to this point Chickenlittle made yesterday.

The main reason Tesla is "constrained" is battery packs... not the rest of the car. They have the capability to make more cars, but they don't, because they never have the battery packs.

If they were able to continue to build battery packs at the usual rate throughout the production line downtime, that means they are able to make (at least) the right number of battery packs to meet their 2014 guidance... 35,000. They would end up with a stockpile of battery packs... something I'm sure they'd never seen in the factory before!

The production line can "speed up" and make enough cars to match the stockpile of battery packs. In other words, there will not be a failure to meet guidance, just a initial delay in deliveries, followed by a surge of deliveries as the year comes to a close.

 

[chickensevil]

I remember during Tesla's 4th or 1st quarter announcement of 2013, I was virtually 100% carefree. I was neutral in terms of my feelings on a beat or a loss. If they beat, then my account would grow, but if they didn't beat then I would be able to buy a lot more shares on the dip. I was actually a bit excited about being able to buy more shares knowing that the rest of the year will be pretty darn good. Right now, I have that same neutral feeling. If tesla beats then great! But if share prices dip for some reason, then it'll be another buying opportunity of a lifetime as outlook for the rest of 2014 and 2015 looks fantastic. Especially when x is available. For those trying to time this stock, I have to warn you, it's impossible. You may never see prices this low again if tesla beats, meets 4th q guidance and announces x to be on time.

This is how I feel as far as a stock purchase outlook. I am just trying to gauge it from an option outlook which is a little harder. But overall as I have said before, right now the story still hasn't changed. So any significant drop would signal a buy to me. Now it is just a matter of figuring out how to play the options game. Me personally I'm leaning toward a straddle just because for Tesla it is highly unlikely we stay flat over the long run. The payout isn't nearly as great as getting the direction right, but at least it should give me some kind of payout....

And with the flag forming on the chart it is likely the sideways trading will be done very shortly. So yesterday before the close I threw some pennies at next week's expiration for a straddle and we will see where it goes, and I am trying to plan a straddle for when the November monthly options drop so I can play that expiration... Because Dec is a little too far away and Oct is just too close.

I appreciate hearing everyone's opinions and outlook as we get a little closer to Q3 it does help and I like having all the different views so I can avoid my confirmation bias as much as possible

 

[Curt Renz]

I agree with you and will even go out on a limb and say q3 has the greatest chance for a large beat than we have seen. So little expected yet new line could do a lot more than before. Vin counting deliveries estimates all uncertain. Orders are out there. Factory closed two weeks so a lot of reports out there about decreasing sales in USA in august. However, battery pack assembly did not have to stop for upgrade of the production line so plant may not have been totally idle for those two weeks. Guidance could be very large for 4thqtr. Will not buy calls for it unless large drop in stock price before but also would not sell covered calls going into report either

We should attention to this point Chickenlittle made yesterday.

The main reason Tesla is "constrained" is battery packs... not the rest of the car. They have the capability to make more cars, but they don't, because they never have the battery packs.

If they were able to continue to build battery packs at the usual rate throughout the production line downtime, that means they are able to make (at least) the right number of battery packs to meet their 2014 guidance... 35,000. They would end up with a stockpile of battery packs... something I'm sure they'd never seen in the factory before!

The production line can "speed up" and make enough cars to match the stockpile of battery packs. In other words, there will not be a failure to meet guidance, just a initial delay in deliveries, followed by a surge of deliveries as the year comes to a close.

+1 Excellent observation. The market reaction should be interesting when Elon explains during the next conference call how this consideration is allowing production to get caught up and perhaps even exceed projections.

 

[DaveT]

I remember 2013 1 st qtr was disappointment with poor margins. EM wanted to "punch himself in the eye". Parts suppliers would ship parts claiming they would only build 2000 cars a year and tires flown in from Europe.

Q1 2013 was a blowout. Do you mean Q4 2012?

 

[Chickenlittle]

Q1 2013 was a blowout. Do you mean Q4 2012?

Thanks. Yes of course that was presented in the 1st qtr but was 4th qtr results

 

[hobbes]

Sounds like it would be a good time to start a Q3 speculation thread! Thanks for all your input, I really don´t know what to expect short-term.

 

[Lump]

Sounds like it would be a good time to start a Q3 speculation thread! Thanks for all your input, I really don´t know what to expect short-term.

How about a poll asking?
Q3 deliveries, meet or miss?
Q3 EPS, meet, inline, miss?
Q4 guidance raise?

 

[Papafox]

Good evening/morning all around the world!

Here is a link by maoing from the China Thread with endless cars in a row waiting to be delivered.

Where is the harbour located in CA the freight ships are loaded and how frequently do freight ships leave CA for China and how many cars such a freight ship usually carries away?

Does anybody have a clue?

http://club.autohome.com.cn/bbs/thread-c-2357-33623127-1.html

Fast Laner,
The closest shipping location from Fremont is Oakland, Ca., a short distance away. That said, sometimes Tesla will ship from other ports if there's an economic incentive or an earlier availability. I live in Hawaii, and a year ago my Tesla was shipped out of Los Angeles, which is a bit of a surprise because the distance to Hawaii is longer from Los Angeles than from Oakland and the drive to the Port of Los Angeles is much longer than the drive to Oakland.

 

[Papafox]

Regarding a potential stock price pull back in the near future and after Q3 results are reported, the possibility certainly exists, but I think any drop from these sources would be lighter than the type of reactions we've seen in the past. The reason for my feelings is that I see quite a few people who would like to own TSLA and are waiting for any type of pullback to buy more. I believe this desire to buy is caused by a much more certain path to success now in place (Gigafactory location chosen, Panasonic on board, state tax concessions in place, no concern about demand by Musk, Model X development likely on track now, etc.). In other words, Tesla looks very much on track to execute its plan right up through Model 3.

I also suspect traders will be less skittish about descending stock prices because the market has shown much more constraint this time around with ascending stock prices. Remember when Adam Jonas's positive appraisal sent TSLA skyrocketing to 265? Now we've had far more concrete positive news (Gigafactory on track, Elon predicting 100,000 car/yr. delivery rate by end of 2015, etc.) and the stock is hovering only about 15 points higher than the peak after the Jonas statements. Remember recently when we saw the midday spike over 290? The market sobered up really quickly and the stock price readjusted quickly. I suspect we'll see less volatility than in the previous year because the price is higher now (tempering rate of rise) but also the path to success years from now is much more certain (tempering rate of decline).

That said, bad things can still happen. Events that cause the stock market to plunge could drag Tesla down in the short run, and any nasty recession would of course reduce demand for cars, since such large-ticket items are the first to be cancelled by consumers in bad times. Thus, my concerns are more focused these days on the health of the market and the economy and less upon the ups and downs of speculation about how well Tesla is doing.

As long as the economy remains healthy enough for the gigafactory to achieve substantial cost reductions in batteries, Tesla will quite likely succeed with its plan and we will benefit from that success.

 

[AlMc]

Well said Papafox. I am certainly concerned about Q3 and any black swan events. I believe the question was asked but not discussed on another thread.....I also do not know what to make out of the effect Alibaba IPO will have on TSLA and other momentum stocks. Will retail investors and fund managers sell TSLA to book profit and buy Alibaba hoping it will give better returns than TSLA in the short and medium term?

 

[dmunjal]

The Fed meeting this week is something to look out for and a general impact on the market.

 

[TSLAopt]

Well said Papafox. I am certainly concerned about Q3 and any black swan events. I believe the question was asked but not discussed on another thread.....I also do not know what to make out of the effect Alibaba IPO will have on TSLA and other momentum stocks. Will retail investors and fund managers sell TSLA to book profit and buy Alibaba hoping it will give better returns than TSLA in the short and medium term?

i wouldn't worry about this...Alibaba is only selling 20bn worth of stock. Even if institutions did need to 'clean house' in their portfolio to buy Ali baba I think the effect on any individual stock would be super minimal.

 

[chickensevil]

Really happy right now that I threw out a Strip for my Straddle, I only sorta wish I had bought a few more contracts at this point, but for right now, I am happy, now I just need to work on finding an exit for my trade... hrmmmm This is the tough one... where do you find a good marker for when to take your money and run?

 

[GenIIIBuyer]

Anyone else notice a huge jump in number of shares available to short at Interactive Brokers. Showing 3.2M available, previously the largest number I'd ever seen was 1.1M shares available.

 

[chickensevil]

Really happy right now that I threw out a Strip for my Straddle, I only sorta wish I had bought a few more contracts at this point, but for right now, I am happy, now I just need to work on finding an exit for my trade... hrmmmm This is the tough one... where do you find a good marker for when to take your money and run?

So I decided to cut and run at a 150% return (although I am still sitting on the call side of that straddle, since I expect it to expire worthless at this point... so if the stock turns back around and I can recover that money I will.)

But I have turned around and initiated a new Strip at 262.5 and 272.5, again with a Friday expiration. I am basically playing with money I made off the sale so if this expires worthless I will be looking at roughly break even on this decision. We shall see where it goes in the short term.

 

[austinEV]

I agree that Q3 earnings don't look great. It's true they aren't delivering many more cars than Q2 (which means revenue is flat) and they have added one-time expenses of the powertrain warranty, all while they have fast-growing expenses. And the factory after retooling has been slower than expected with production (although I think they will met Q3 delivery guidance of 7800 vehicles delivered).

However, if Tesla meets delivery guidance for Q3 and even if they're non-GAAP non-profitable, I still think there's the bigger backdrop of a huge Q4 guidance (over 13k vehicles delivered) along with the bigger backdrop of Q1, Q2, Q3 2015 being massive quarters of production ramp toward their 100k production run rate by end of 2015.

The issue I have with this is that the Q4 guidance, and even 2015 guidance has already been given. There is virtually no chance they will increase guidance for Q4 (will be sweating to make existing forecast) or 2015 (same). So, if they were to miss deliveries for Q3 by a bit, I don't see how that could be balanced by any future guidance, at least at this time. The potential good things must come from the model X schedule, not deliveries IMO.

 

[aznt1217]

Man, what is going on today, the story has not fundamentally changed for the worse...?