TSLA Market Action: 2018 Investor Roundtable

[Opus BC fan]

Question: I have a real basic novice question. I understand buying at this SP. I don't understand selling at this price. It has to be something more than hysteria.

Comment: In my personal (and professional) opinion questions about Elon's mental health are unfounded. He is under an enormous amount of stress but he can acknowledge this. His thought processes appear as sharp as ever and he is integrated with his emotions. In spite of all the stress, he appears genuine and grounded in his presentation.

 

[tivoboy]

Let's drop the pretense that you don't care. You posted, you wanted the attention. But thanks for linking to your $280 calls sold and congrats on making $5 per contract.

They were sold at 3100$ per contract.

 

[neroden]

So some people are complaining that Musk's openness, directness, and so on is emboldening the disinformation-spreaders.

Of course, the result of this is that more and more of us are supporting the move to go private.

If Musk's goal is to go private... arguably he did exactly the right thing. (Oh. And acting in order to convince people to vote one way or another on a shareholder vote isn't, legally, stock manipulation.)

 

[mershaw2001]

Question: I have a real basic novice question. I understand buying at this SP. I don't understand selling at this price. It has to be something more than hysteria.

There are a lot of people who bought between 360 and 387 after elon tweeted. Even people on this board said "how is this not like printing money" as they gobbled up shares. I assume some decided to use margin at 380. Anyone using margin would have gotten a margin call, so there's at least one source of shares.

I wasn't buying then, but I was selling shares today due to a margin call.

 

[bdy0627]

From TA stand point no. Just like I thought the $303 gap will never gets closed now that we have a buyout offer. Lo and behold, it gets closed.

Some of these TA iron rules are there because of countless dreams of "this time might be different" got crushed

I was having the same doubt about how in the world that gap would fill, though deep down I kept looking at it and wondering. Amazing.

 

[neroden]

Here's the actual statement from the board, as given to the New Yuck Times:

“There have been many false and irresponsible rumors in the press about the discussions of the Tesla board.

I would like to note the strength of this statement -- "many false and irresponsible rumors".

I believe this is convincing the Board to go private.

 

[Unpilot]

As far as the Ambien and rec drug use...give me a freaking break. At least the man is honest...no Clinton "But I did not inhale" crap.
Working insane hours and trying to sleep with the weight of the company on your shoulders....hell yes take some Ambien.

Here is a report from 2011...so I am sure the use has gone up
"Between 2006 and 2011, sleeping pill prescriptions rose from 47 million to 60 million in the U.S. About 38 million of those prescriptions were for drugs containing zolpidem (including the brand name Ambien)"

It is a widely used...and yes probably abuse drug...but to judge an honest man for saying he uses it...that is ridicolous to an extreme.

The rec drug use is a straw man as well. If only we could flash forward to the end of hypocrisy as it relates to pot.
The day of legalization can't come fast enough.

Those that throw their hands up and judge probably do it with scotch on their breath.

 

[ggr]

I think the mods move it to its own thread -- feel free, mods. This post kind of grew in the editing.

TSLA Market Action: 2018 Investor Roundtable

Mod: done. But I'm on the road, can't possibly move all the followups. New discussion can go there though. --ggr.
When do shorts have to cover? (Neroden's megathread)

 

[BrianZ]

Why?

Over a year ago, I spent a while trying to figure out which institutional investors were long-termers and which were short-termers. I figured T Rowe Price were short-termers and Fidelity funds were about *half* short-termers. This doesn't surprise.

May I ask what approach you used to figure out if an institutional investor is long term or short term?

 

[Menifeer]

It is a widely used...and yes probably abuse drug...but to judge an honest man for saying he uses it...that is ridicolous to an extreme.

Why didn't he have the good sense to realize that mentioning its use could be used against him?

He must have to buy a lot of shoes...

 

[Unpilot]

Why didn't he have the good sense to realize that mentioning its use could be used against him?

He must have to buy a lot of shoes...

Hmm...I suppose because he is an honest man.

He cares less about shoes than you I am sure.

 

[neroden]

@tentonine
The gist of the article seemed to be saying Musk is not well, and considering tsla is a cult stock with Musk being the leader, that probably explains it even though most of it is not new and probably overly dramatic. The one thing that concerned me (aside from worrying about this kids) was the mention of concerns about shorts and the worst is yet to come. If tsla really is going to be profitable this quarter, Musk would have a pretty good handle on that by now, so why would he be worried about shorts if they are about to post profits? So hopefully all that talk about being profitable is not going to turn into an "oops we spoke too soon" sort of thing.

Has anyone calculated whether the extra legal costs from fending off all the totally bogus lawsuits and investigations could tip Tesla from profit into loss in Q3?

 

[tivoboy]

May I ask what approach you used to figure out if an institutional investor is long term or short term?

For me, I look at consistency in what their reported holdings are. If they have continued to report it as a holding over the years and through all the ups and downs, I see that as long term minded.

I would also add that I don't see many of these funds moving in and out of really ANY equity trying to time the market. That would be very disruptive to their projections. Sure, they will factor in where they think a specific holdings true value MAY be now and in the future, but they aren't just selling at 375$ (in this most recent example) and then hoping to buy back at 250$ at some point in the future (well, uh, maybe they know something/s WE don't) but that just isn't the general practice of these type of funds.

 

[neroden]

My reaction, too. I was taken aback that he would still be worrying about shorts destroying Tesla on the heels of “profitable from now on.” That said, is there anything a heavily short-biased media can’t spin into existentially threatening FUD no matter how much more Tesla achieves? On this very point, at least pundit has argued that profitability will surely torpedo Tesla’s valuation, imposing a traditional car company PE on it.

Ludicrous though this sounds, that pundit might actualy be right, if the disinformation campaign continues. So, going private makes sense.

 

[neroden]

I sure hope you're right...

I know I'm right. The tiny little tidbit of information about a bottleneck in AWD front motor production, which came out last week, seems to have gotten lost in the noise. (And yes, that bottleneck is concerning, of course, but I don't see any reason to be seriously worried. I don't remember the details but I believe it was a parts issue.) The sating of LR RWD demand (which doesn't surprise me) is pretty clearly documented over in the Model 3 Deliveries forum -- most people ordering LR want AWD.

 

[bdy0627]

I have a question - what was it about the NYT article that was so devastatingly bad that the share price went down so much?

- We already knew that Musk takes ambien. He even tweeted about it a few months ago.
- We already knew that he works insane hours and doesn't sleep enough. He has referenced this numerous times over the years, particularly recently, and has appeared exhausted in interviews occasionally (particularly the CBS interview in early April).
- We already knew most of the context for the "funding secured" tweet - i.e. based only on informal discussions, no vote from the board, etc.
- We have heard Musk make comments before along the lines that he would be happy for someone else to run the company if he thought they could do a better job than him.
- We already saw him get very emotional over the Model 3 ramp and the stress resulting from that. That was just recently in the June shareholder meeting, and the market didn't care then. The share price change was strongly positive after that meeting.

So what was it?
- Illegal drug use allegation? I doubt it because this didn't feature in most of the headlines I saw. Furthermore, although I have not seen him admit to illegal drug use, I have seen him make thinly-disguised references to drugs from time to time, and so occasional drug use shouldn't be much of a surprise (I don't like this and it concerns me a little, but it's not really new).
- The fact that the "funding secured" tweet was made during a solo car journey? Seeing as we knew it was only informal anyway, I'm struggling to see why that merits such a large drop in share price.
- The rumour that the board is looking for a COO? Why would this be so terrible? Musk has mentioned before that this would be a good idea at some point if they could find the right person, just doubted that they could do so.
- Or just the sensational headlines make most people think that we didn't already know about any of this stuff?

I'm very surprised it caused such a huge drop. I thought it would be more like where we opened - around 3-4%. I believe the primary negatives for the market from the NYT article are the portrayal of Elon as very unstable, emotionally distraught, out of touch (especially with the Tesla Board), hanging on by a thread, AND the suggestion from Elon that things are going to get worse. The second big negative I think the market took from the article is the strong suggestion that the Tesla Board no longer trusts Elon, has become angry at him, and feels the need to police him. Most of these things did not seem to me to be presented in a fair and balanced fashion, but were rather distorted or exaggerated to some degree. I honestly don't know how the Board feels right now about Elon and his privatization idea. No question to me that the market response was irrational.

 

[neroden]

For me, I look at consistency in what their reported holdings are. If they have continued to report it as a holding over the years and through all the ups and downs, I see that as long term minded.

I used the same technique.

And T Rowe Price has had some major increases and decreases (back and forth) in their reported holdings of TSLA. So I pegged them as a short-termer. Seems to be true of all their funds holding TSLA.

I sorted Fidelity out by funds. Some funds have held on through thick and thin, others are darting in and out. Hence my half-and-half guess.

I would also add that I don't see many of these funds moving in and out of really ANY equity trying to time the market. That would be very disruptive to their projections.

Rennaissance Technologies almost certainly is trying to time the market though; that's what they do, as a quant. For a few companies, like them, I just looked at their published description of their strategy.

 

[bdy0627]

Welcome to the wild world of trading Tesla It's always been that way. Very useful if you can keep a cool head.

Which has proven to be rather difficult at times both on climbs and dips when it seems like this time it's different. I thought our climb after the privatization announcement might be different. Nope. Got a little burned there but not too bad. Now this fall has the feeling of perhaps this time Tesla is really going to implode. Nope, not likely. It's really nothing more than a 22% dip for TSLA that we often get 1-2x per year. Definitely time to buy the dip, but keep some dry powder in case we drop further.

 

[dondy]

I would like to put the situation and the current events into proper perspective.
You all've seen enough of FUD stages, campaigns and attacks.
For 3 years Tesla was the battleground between bulls and bears. A lot, lot of televised drama. And now all these "experts" loose it.
Like completely. Tesla is going away. And It will be gone from public radars for 15 years. Absent. I would go mad too if somebody would take the best toy away. So not surprisingly FUD is gone way beyond rational, and these guys have completely lost idea of time and that there will be something after October. Also for them.

So when you try to make a decision about what to do and how to react at all this, think about not only about last month but about last 3 years and what credibility you can assign to anything coming from CNBC, NYT, Bloomberg, BInsider etc.
Think about what did Tesla do during last years and what has changed for a company.
Then look at the current situation with stock and think about what should happen with the stock from buyer perspective. You know like a dream come through or best possible case scenario.

Those interested in SEC can read plenty of relevant info about what they do actually, good practical start would be the case of Mark Cuban. He had a 9 years (2004-2013) battle against SEC. Which he won.

I've seen somebody was asking why not to do privatization in Q1. The answer was obvious: Musk was busy with Model 3. One thing at the time.

 

[avoigt]

"Tesla continues to be the largest equity short in the U.S. with $11.2 billion of short interest, 33.4 million shares shorted, or 26.20% of its float.

While there has been some short covering since The Tweet, Elon Musk was only able to drive away less than 4% of his short sellers. Shorts have only covered 1.3 million shares since Tesla’s original stock price spike, hardly a short squeeze and more likely an exit by shorter term momentum short sellers and fat-trimming by the lesser capitalized long-term short sellers. In actuality, many of the longer-term short sellers have backed up their bets and slightly increased their short exposure over the last week.

Tesla short sellers are now up $1.2 billion since “The Tweet” and the chances of a near-term large scale short squeeze are minimal. Unless Elon Musk can get more traction in “taking Tesla private” and its stock price reverses course and heads back up to Musk’s $420/shares target, short sellers are under no impetus to cover their positions."

https://www.s3partners.net/Research/TSLA18.php?v=1